Stripe, an online payments processor, is expanding its US service to include loans to Internet-based companies.
The Stripe announcement on 5th September said, “Today, Stripe launched Stripe Capital, an easier way for internet businesses running on Stripe to access capital.”
Access to capital is a challenge for online businesses, and banks have cut their lending to small businesses by 50% over the last decade, and 70% of businesses say they don’t have access to the level of funding they need. Furthermore, “Those who succeed at getting loans report spending more than 25 hours on applications and paperwork, and then waiting weeks or months for approved funds to actually become available to them,” stripe says.
By contrast, Stripe Capital offers a speedier solution: “Stripe Capital’s full integration with Stripe means there’s no lengthy application, eligibility is determined quickly, funds hit a user’s Stripe account the next business day, and businesses can repay as they earn. […] In addition to serving Stripe users directly, Stripe will also extend Stripe Capital to its platform partners (such as online store builders and B2B SaaS companies), enabling them to offer their own business users access to smart financing.”
The press release also noted that Stripe Capital’s algorithm considers “hundreds of relevant signals for each business, including payment volume, percentage of repeat customers, payment frequency, and changes in revenue growth.” And, according to the announcement, repayments are automated with a fixed percentage of daily sales and there are no recurring interest charges or late fees.
The firm’s chief product officer, Will Gaybrick, commented on the importance of granting access to funds to small businesses: “It’s important to think about financial inclusion not just in terms of consumers, but also in terms of businesses. Businesses, especially small businesses and startups, are the engines for job creation in our economy. It should be trivially simple and lightning fast for them to access the capital they need to smooth their cash flow and invest in their own growth.”
Stripe is also one of the official partners of Facebook’s cryptocurrency project Libra.