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Stripe Capital

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Re: Stripe Capital

#191

Post by [deleted] »

meowface wrote: post #176
owens99 wrote: post #150

Earlier quoted context omitted.

It’s a solid response. Not sure if it’s worth pointing out but you are totally fan boying PC and making his response out to be way more than it is.

Regardless of the particular response or the company, it's good to see transparency and lack of bullshit exec speak from C-levels. It might be more common among tech startups, but plenty of non-tech startup founders do it too. I wonder if the correlation might be age, since it seems to me that younger people try to avoid bullshit and seek out authenticity (giving or receiving) moreso than older generations, which wer…

[deleted]

Re: Stripe Capital

#192

Post by derefr »

chasedehan wrote: post #190
pc wrote: post #59

Earlier quoted context omitted.

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

While at first I saw this announcement and applauded (it seems like something Stripe would be great at administering), the structure of these loans is almost exactly the same as a payday loan, even if the APR is dramatically less. What is crazy, is how eerily similar Patrick's response is with the Payday Industry's response about why Payday Loans are good for consumers. >the downside risk of credit obligations they c…

One would assume that there is a difference between what is a "predatory" offering to irrational individuals, and what is a "predatory" offering to mostly-rational corporations. For the same reason that individuals gambling is considered not-so-sensible, but corporations holding liquidity in the form of investments isn't so much; or the same reason that individuals purchasing on a lease are usually being screwed, while corporations leasing e.g. equipment aren't. Unlike people, businesses don't tend to take these deals if they're sub-optimal for them. If they're taking them, they are usually the best solution, even after all the NPV calculations.

Re: Stripe Capital

#193

Post by PeterisP »

ceejayoz wrote: post #143
whatshisface wrote: post #92

Earlier quoted context omitted.

https://www.kosherswitch.com/live/tech/how

These approaches are so baffling to me. Their tagline is even "control electricity on Shabbat!" while telling you all the ways you're technically not controlling electricity. Loopholes that violate the spirit of the law but technically fit the letter of it make sense in doing your taxes, but it seems extremely risky to take that approach with a god. "Haha guys, very clever, you got me" doesn't seem like the end resul…

There's no prohibition on controlling electricity as such, the most relevant actual prohibition (there are a few other justifications for particular circumstances) is on starting a fire, which prohibits turning on a light (which most devices involve) and also many ways of controlling electricity (e.g. a switch) violate as it a spark is created. Benefitting from a fire that's started before Shabbat is not prohibited, only the act of lighting it.

Regarding the loopholes, well, in Rabbinic Judaism the notion is that there simply can't be any loopholes there. Unlike laws written by humans, the word of God is considered axiomatically perfect and flawless - if you find a "mistake", that can't be a mistake, that's fundamentally impossible, God does not make mistakes. There simply can't be an accidental hole or a mistaken omission. The letter of the law is considered literally divinely perfect, every nuance or "loophole" is considered as intentionally placed there by an all-knowing being that knows all the future consequences of that nuance or "loophole". If God wanted the law to be slightly different, He obviously could and would have made it different, but He did not, so it should be interpreted exactly as written.

Re: Stripe Capital

#194

Post by bernardom »

chasedehan wrote: post #190
pc wrote: post #59

Earlier quoted context omitted.

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

While at first I saw this announcement and applauded (it seems like something Stripe would be great at administering), the structure of these loans is almost exactly the same as a payday loan, even if the APR is dramatically less. What is crazy, is how eerily similar Patrick's response is with the Payday Industry's response about why Payday Loans are good for consumers. >the downside risk of credit obligations they c…

This is so wrong. A payday loan is due on your next payday, no matter what. This loan flexes the term based on ability to pay.

The better analogy would be a fixed-cost loan with variable installments based on your income- a much, much friendlier loan structure for consumers.

What makes payday loans unaffordable is their structure, more than their cost. In California, a typical payday loan goes like this:

1- You write me a $300 check and date it for two weeks from now (when you get paid)

2- I give you $250 in cash

3- Two weeks later, I cash the check

If you had to borrow $250, what are the chances that you have $300 left over on your next paycheck? Zero. So really, it's:

3^- You come back to the store and say "don't cash that check, I'll get hit with a $25 overdraft fee."

4- I say "ok, give me $50 and I'll move your due date back 2 weeks."

5- You say "phew, thank goodness!"

6- Two weeks later, goto 3*

So the one-time payment is what makes it horrible. Even if they charged 0% APR and all you had due was $250, you'd still be hosed. An installment loan, though, where you pay $50 every two weeks for N months is clearly better, as proven by step 4 here.

Re: Stripe Capital

#195

Post by jakelazaroff »

chasedehan wrote: post #190
pc wrote: post #59

Earlier quoted context omitted.

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

While at first I saw this announcement and applauded (it seems like something Stripe would be great at administering), the structure of these loans is almost exactly the same as a payday loan, even if the APR is dramatically less. What is crazy, is how eerily similar Patrick's response is with the Payday Industry's response about why Payday Loans are good for consumers. >the downside risk of credit obligations they c…

> the structure of these loans is almost exactly the same as a payday loan, even if the APR is dramatically less.

I don’t think this is the case. Payday loans compound interest, don’t they? You end up owing more money the longer you take to pay them off. With this, you only ever have to pay back the advance and fixed fee no matter how long it takes.

Re: Stripe Capital

#196

Post by richardlblair »

pc wrote: post #59
jawns wrote: post #25

The way Stripe Capital has structured repayment of the loan -- fixed fee, dynamic loan term -- is is an interesting way to make it hard to compare against other lenders, which typical express their fees through APRs. The term of the loan is variable, and depends on daily sales, but assuming you have a high volume of sales and take out a small loan, the effective APR is going to be through the roof! For instance, supp…

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

While all true statements, anyone who has been anywhere near [brandname] Captial products know the reason why you are offering this structure is to get around lending laws.

Just be honest, you don't want to deal with the regulatory issues that surround offering a fair compounded interest rate.

Re: Stripe Capital

#197

Post by ant6n »

mNovak wrote: post #57
adamqureshi wrote: post #31

Stripe offered my 1 man shop a cash advance. $12,500 $1,250 Fixed fee then 10% of sales withheld. $18,500. $1,850 Fixed Fee. 14% of sales withheld. $25,000.00 $2,500 fixed fee. 20% of sales withheld. terms: No lengthy application: You’re pre-qualified for your advance—no time-consuming application process required. No hidden fees: We charge one fixed fee for the advance—there are no interest charges or late fees. Pay…

The important question here is what are your average monthly sales? (e.g. what is the expected term and thus APR of the loan?)

"until the total amount owed is paid down"

Re: Stripe Capital

#199

Post by edwinwee »

GordonS wrote: post #183
willyg123 wrote: post #99

Earlier quoted context omitted.

I have worked in the small business lending space before. Stripe cannot price in terms of APR because legally, it is not a "loan". It's a purchase of future receivables. If it was a loan, the APR would be considered usurious in most states.

As @pc has been active here, I'd love to hear from him on this - in legal terms, according to your lawyers, is Stripe Capital considered a loan?

I'm definitely not a lawyer, but I work at Stripe. Capital works a bit differently. Yes, we offer loans, but we also offer cash advances (with a focus on loans right now). They're pretty similar—repayment via your sales, fast funding, a fixed fee with no interest, and a streamlined application, to name a few things. When we make an offer, we’ll make clear if it’s actually a loan or cash advance (and what that means for your business).

Re: Stripe Capital

#200

Post by TuringNYC »

hbosch wrote: post #51
jawns wrote: post #25

The way Stripe Capital has structured repayment of the loan -- fixed fee, dynamic loan term -- is is an interesting way to make it hard to compare against other lenders, which typical express their fees through APRs. The term of the loan is variable, and depends on daily sales, but assuming you have a high volume of sales and take out a small loan, the effective APR is going to be through the roof! For instance, supp…

Well, and of course Stripe doesn't (and hasn't) peddle itself as a value option or a business that gives you the "best deal". The best part about Stripe is convenience, as with all their products. If you take out a small business loan through Stripe, and you use their other checkout or payment tools, it makes repayment automatic. That's the selling point. I don't think anyone looks to Stripe for low fees or value loa…

That is not what I understood to be the driver. It would be nice if some Stripe-based store-owners reading this could opine on this?

I assumed the primary value was tying debt service to revenues at a micro level.

I assumed the secondary value was that -- since Stripe had intimate knowledge of your store, revenues, cash flows, correlations to customers -- that they could better price your loan and give you a more competitive rate on the loan.

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