Hot on the heels of Clearbanc, Stripe has launched Stripe Capital for Internet businesses that need capital to grow.
Businesses on Stripe rank access to capital as their biggest obstacle to growth.
Traditional lenders aren’t set up to serve internet businesses, typically requiring lengthy applications, complex collateral obligations, and fixed payment schedules. Stripe Capital is designed to cut through the red tape, their goal is to provide access to fast, flexible financing that helps online businesses invest in growth.
How Stripe Capital Works
- Check eligibility in your Stripe dashboard
- Select the loan amount and terms
- Receive your funds the next day
- Pay back the loan as you earn
Stripe Capital FAQs
After I accept an offer, how quickly will I get my funds?
After being approved, you’ll see the funds in your Stripe account typically the next business day.
Do I have to pay interest?
The cost of your advance is one fixed fee that does not change. You won’t pay any interest on top of this fixed fee.
Will this affect my credit rating?
No. All offers are based solely on the transaction history and volume of your Stripe account, therefore there is no credit check for accepting an offer or checking your eligibility.
Can I adjust my offer?
When you log into the Capital tab of your Dashboard, you’ll be able to select from three different offers. If you’d like a different amount, you may request any amount up to the maximum offer that appears in your Dashboard by contacting support. The fixed fee and repayment rate will adjust to your new offer.
What happens when my offer expires?
Your offer is available for 30 days. After that point, your business will automatically be re-evaluated to see if you’re eligible for additional offers. If you’re seeking financing at a later time, check back into the Capital tab of your Dashboard to see if you have another offer.
Can I receive an additional offer while I have an existing advance out?
You may be eligible for additional funds as you pay down your initial advance. You will receive an email and Dashboard notification if you’re eligible.
How do you determine who qualifies for an offer?
Eligibility is determined based on a combination of factors, including overall processing volume and history on Stripe. Eligible U.S. businesses will receive an email and Dashboard notification if they have an offer available.
How is a merchant cash advance different from a loan?
With a merchant cash advance, your business will sell Stripe a portion of your future sales. As part of the sale, Stripe advances you a lump sum that works in a similar manner to receiving funds from a loan. You’ll pay the same fixed fee and have the same percentage of your sales go toward repaying the advance, but unlike a loan, a merchant cash advance has no set repayment term.
What happens if my revenue slows down?
The repayment rate is a fixed percentage of your sales volume and will dynamically adjust to your company’s performance. That means when sales increase, you’ll pay the advance down faster. On slower days, you’ll pay less.
Can I pay down my advance early?
Yes, you can pay down your advance in full at any point. There are no additional fees for early repayment.
Stripe Capital Availability
Stripe Capital will initially be offered to select businesses in the US based on factors that include payment volume and history on Stripe.
Eventually, Stripe hopes to offer capital to virtually every business on Stripe.
See Stripe Capital for more details.
How does Stripe Capital Compare to Clearbanc?
Clearbanc is investing $1 Billion in growth capital in 2019, it’s operation is similar in nature to Stripe Capital and qualifying companies can get from $10K – $10M in 24 hours.
Clearbanc uses data from sources like Stripe, Shopify, Adwords and Twitter to make decisions and one of the selling points it pushes hard is that startups may no longer have to give up equity in return for capital just to fund growth. Clearbanc has more than 10 integrations for it’s decision making data collection.
While Clearbanc will undoubtedly invest more capital than Stripe this year, it’s likely Stripe and others will catch up soon.
One thing is certain, fundraising just became a lot more interesting for early stage ventures that may no longer have to give up equity to fund their growth.