Stripe Capital Business Loans Review: 2020

Stripe Capital review

Stripe Capital is a lending service recently launched by major payment gateway Stripe. The company offers small- to medium-sized business loans to customers that use Stripe Connect, its marketplace platform. As an alternative lender, Stripe Capital is helping to provide loans to businesses that might otherwise not be able to get funding through traditional means. Stripe Capital promises fast funding, one flat fee, and payments based on your revenue. 

Stripe Capital Facts

  • Factor Rate: Varies
    Amounts: Varies
    Loan Term: 3 to 18 months
    Minimum Credit Score: Any
    Co-Signer: Not Applicable

  • Fees: None
    Time to Funding: 1 business day
    Hard Credit Check: No
    BBB Rating: A+
    Trustpilot Rating: 2.5 Stars

Pros & Cons

Pros

  • Stripe lets you know if you qualify for a loan and provides you with three options right on your dashboard. You don’t have to fill out an application to see if you qualify
  • Qualifying for a merchant cash advance or loan is solely based on your history with Stripe. Your credit score is not a factor
  • If you want to change the amount that you want to borrow, you can easily do so, and Stripe Capital will adjust your fixed fee and repayment rates accordingly
  • After accepting your loan offer, funds are typically deposited the following business day
  • There is a single fixed fee based on the total amount of money that you borrow
  • Payments are automated
  • Payments are based on a fixed percentage of your daily sales
  • There are no late fees or fees for paying back your balance early

Cons

  • Stripe Capital is only available to Stripe customers as well as platforms and marketplaces on Stripe Connect. If you are not a Stripe user, you cannot qualify for a loan
  • Loans are only available to select businesses in the United States (although Stripe does say that the company wants to make loans available to virtually all Stripe users in the future)
  • There is very little information regarding what the percentages used to calculate your single fixed fee are or what the repayment rates are
  • Since Stripe Capital is so new, there are very few customer reviews. Reviews on Trustpilot refer to Stripe’s other products
  • Many of the negative reviews of Stripe say that getting into contact with the company is very difficult
  • You can only contact Stripe through email or by filling out a form on their sales page (although Stripe customers do have access to 24/7 chat and phone support)

About Stripe Capital

Stripe is a San Francisco-based technology company that was launched in 2011 by brothers Patrick and John Collison. 

In the beginning, the main goal of Stripe was to make accepting payments online easier. The company builds economic infrastructure for the internet. Now, companies of all sizes all around the world use Stripe’s software to accept payments and manage their businesses. The goal is still to remove financial complexity, making conducting business transactions online easier.

In September 2019, Stripe announced the launch of Stripe Capital. The FinTech company now offers loans to Stripe users. The reason behind the launch was to provide business owners who operate online with fast, flexible financing to invest in growth.

The launch was announced on many major sites, including Business Insider, Inc, and CNBC.

Using Stripe Capital, business owners can receive funding quickly. There’s one flat fee, and repayment adjusts automatically based on your sales. Getting funding is much easier than getting funding from traditional lenders. 

Currently, Stripe Capital is only available in the United States. Funding may only be available to select businesses based on several factors. As Stripe Capital grows, however, Stripe hopes to expand lending to offer capital to all businesses on Stripe. 

Loans through Stripe Capital originate from Celtic Bank (Member FDIC). While you manage your loan through your account on Stripe Capital, the money that you borrow comes from Celtic Bank.

In this loan review of Stripe Capital, you will learn:

Stripe Capital Merchant Cash Advance Options

Stripe Capital states that the company offers access to two types of loans.

A merchant cash advance is an advance on your future sales. You then pay back a certain percentage of your daily sales until your loan is completely paid off. Unlike a traditional loan, you do not have a fixed repayment term.

Like a loan, it provides working capital to small and medium-sized businesses that operate online and that might have trouble getting financed by a traditional lender. Funds can be used to help your business grow.

A merchant cash advance through Stripe Capital can be used for just about anything that you need for your business, including:

  • Building products
  • Purchasing inventory
  • Marketing strategies such as online advertising
  • Expansion
  • Scaling your business

The type of advance that you qualify for is displayed in your Stripe dashboard. The type of loan that you qualify for is based on the specifics of your business.

Stripe Capital Merchant Cash Advance Rates and Terms

Terms

Stripe Capital does not state the terms of its loans. Stripe does not say if the terms for a merchant cash advance are different from the terms for a loan. The company does, however, state that financing is flexible. 

With many types of business loans, the terms are fixed. Short-term business loans generally range from 3 months to 18 months. Traditional bank business loans can range from 3 years to 10 years. Some loans can have terms of up to 25 years. A business line of credit might have a term ranging from 6 months to 5 years.

Terms for Stripe Capital are not based on a fixed payment schedule. Instead, your terms are dependent upon your business. You continue to make payments until the balance of your loan is completely paid off. Again, the company does not make known if this is just for a merchant cash advance, or if the process works the same for a loan as well. 

Rates

Stripe Capital does not work using interest rates or APRs. Instead, you pay a single fixed fee based on the total amount borrowed.

You also pay a certain percentage of your sales towards your loan. The percentage that you pay appears to be based on the amount that you borrow. The percentage of your daily sales that goes towards your repayment increases the more capital that you borrow. 

Without an actual interest rate, comparing Stripe Capital to other lenders can be a bit more difficult. You will need to decide if paying a fixed fee is better for you than paying an interest rate during a fixed-term or not. 

Fees

There is not much information regarding the fees associated with Stripe Capital loans. The only fee that is known is a fixed fee charged based on the total amount that you borrow.

The actual fee is not disclosed. In the examples on Stripe’s website, the fee is 10%. For instance, if you borrow $20,000, your fixed fee is $2,000. 

The page does state that all numbers shown are only examples. According to Stripe, the fixed fee is dependent upon the total amount borrowed. The company does not, however, disclose what the range for fixed fees is. 

There are no late fees associated with Stripe Capital loans. You also are not penalized for paying off your balance early. 

Other information regarding fees such as origination fees and non-payment fees is unclear. It appears as though there are no origination fees based on the fact that Stripe says you are only charged a single fixed fee. 

Business Loan Amounts

Stripe does not say what the minimum and maximum loan amounts are. At the time of writing this article, no specific limit has been set yet. 

According to John Collison in an interview with TechCrunch, loans may potentially stretch into hundreds of thousands. Based on financing issued since the launch of Stripe Capital in September 2019, typical loan amounts range from $10,000 to $20,000.

Time to Funding

Stripe Capital is designed to issue funds quickly. In most cases, funds can be deposited into your Stripe account as soon as the following business day. 

Stripe Capital Business Loan Requirements

One of the goals of Stripe Capital is to cut the red tape associated with applying for a traditional bank loan. The company aims to provide customers with fast access to the capital needed for business liquidity and growth. Some requirements need to be met to qualify first. If you do qualify for financing, the application process is quick and simple. 

Qualifying for a Stripe Capital Business Loan

Typical Credit Scores

Stripe does not say if there is a minimum required credit score that must be met to qualify for a business loan.

Stripe states that eligibility for loans is driven by data. Your eligibility is based on your history with the company. Stripe analyzes hundreds of signals for your business, including:

  • Payment percentage
  • Payment frequency
  • Percentage of repeat customers
  • Changes in your revenue growth

There is some confusion as to whether or not your credit score plays a role in your merchant cash advance or loan approval. Stripe states that there is no credit check to check your eligibility or to accept an offer. In the fine print, however, the company does state that all loans are subject to credit approval.

Minimum Requirements

You will need to meet some requirements to qualify for a Stripe Capital business loan.

One of the biggest requirements is that you must currently be a Stripe user to qualify. Your eligibility is based on your Stripe transaction history. If you do not use Stripe, the company doesn’t have anything to analyze and therefore cannot create an offer for you. 

Stripe Capital is also available to platforms and marketplaces on Stripe Connect. B2B platforms can offer their customers financing powered by Stripe. 

Some lenders require collateral for loans. Stripe Capital does not require any collateral. Merchant cash advances and loans are unsecured. 

Are There Any Restrictions?

Stripe Capital is not available to any businesses that do not currently use Stripe for their business. If you do not use Stripe, you will not qualify for a merchant cash advance or loan. 

While Stripe serves businesses around the world, Stripe Capital is currently only available to select businesses located in the United States. Stripe does state that the set of businesses will expand as the program grows. The company hopes to be able to offer merchant cash advances and loans to virtually all of its users in the future.

Some business loan lenders have certain restrictions regarding what types of businesses cannot receive financing. While Stripe does state that Stripe Capital is only available to select businesses, the company does not disclose what types of businesses are ineligible for a merchant cash advance or loan. 

Applying for a Swift Capital Business Loan

Stripe Capital aims to make the process of applying for a business loan much easier than the traditional loan application process. 

The first step in the process is finding out if you are eligible. Your eligibility is displayed at the top of your Stripe dashboard. The company will let you know if you qualify and what type of loan option you qualify for. Your eligibility is based on a variety of factors such as your payment volume, your revenue growth, and your history with Stripe.

If you qualify for a merchant cash advance or loan, Stripe provides you with three offers to choose from, which include the fixed fee and percentage of daily sales for repayment. 

Your loan offers are good for 30 days. After the 30 days is up, your business is automatically re-evaluated. If you do not want a loan at the time, you do not have to accept any of the offers available. You can check back at any time to see what options are available to you.

The company shows you the maximum amount that you qualify for. If you want to apply for a smaller amount, you can do so by contacting Stripe support. Your fixed fee and repayment rate will be adjusted based on the loan amount that you want. 

After you make your selection, Stripe reviews your information. There is no credit check performed when checking your eligibility for a loan. Stripe also states that there is no credit check for accepting an offer. However, the fine print near the bottom of the Stripe Capital page does say that all loans are subject to credit approval. 

Once your loan is approved, your funds are deposited into your Stripe account. Once you have funds, you can use them however you need for your business. Merchant cash advances and loans can provide your business with liquidity as well as help aid in growth. 

If you find that you need more money while you are still repaying your current loan, qualifying for additional financing may be possible. As you pay down your current balance, Stripe will send you an email and a dashboard notification to let you know if you’re eligible.

Repaying Your Business Loan

Stripe makes the process for repaying or Stripe Capital business loan simple. Payments are fully automated and are based on a fixed percentage of your sales.

Payment Due Dates

Unlike most other business loans, which have a single monthly payment that you have to remember to make, you make daily payments. Stripe deducts a fixed percentage of your daily sales every day until the total of your loan (plus your fixed fee) is paid back. 

The exact dollar amount that you pay varies based on how much you make each day. Since your repayment is based on sales volume, the amount you pay will adjust based on your daily performance. As sales increase, you’ll pay down your advance faster. If you have a day where you don’t make any revenue, you won’t make a payment that day. 

Accepted Methods of Payment

Stripe does not specify what types of payment methods are accepted. The company does automatically deduct your payments from your Stripe account.  The company does not make known if you can make payments using other methods. 

Early and Additional Payments

You can pay down the balance of your merchant cash advance or loan at any time. There are no additional fees for doing so. If you choose to pay down your balance early, the company says to contact support for more information. 

Stripe Capital Customer Experience

Stripe Capital Customer Service

If you need to contact Stripe, the only way to do so is through email. You can contact the sales team using the form provided on the sales page. You need to fill out your name, business email, company website, country, monthly sales information, and your questions. 

You can also send general queries to info@stripe.com

Stripe doesn’t provide a phone number or business hours on its website. According to the company’s blog, Stripe does provide 24/7 phone and chat support, but the support is only for Stripe users. If you currently don’t use Stripe, the only way to contact the company is through email. 

You can also follow Stripe on social media. The company has accounts on Twitter, LinkedIn, Facebook, YouTube, and GitHub. Following the company keeps you up to date on new developments, news, and more. The social media platforms also provide another way to contact the company. 

Customer Reviews and Feedback

Stripe has been accredited with the Better Business Bureau since 2013. The company currently has an A+ rating.

Stripe has 2.5 out of 5 stars on Trustpilot. 48% of reviews are 5-star, or “Excellent.” 45% of reviews are 1-star, or “Bad.” 

The reviews on Trustpilot focus on Stripe’s payment and business operations products. Since the company only recently began issuing loans, there are no reviews on the site regarding the loan product.

Many of the customers who posted 5-star reviews stated that they were surprised at all of the negative reviews. Positive reviews of Stripe say:

  • The company as a whole is excellent
  • Customer service is great

There are almost as many negative reviews of Stripe as there are positive. Negative reviews of the company saod:

  • Customer service is terrible (difficult to contact, poor quality service)
  • There are issues dealing with fraudulent charges, such as getting charged fees or having an account shut down and not receiving money

There are a few reviews of Stripe Capital posted on the Stripe website. Reviews are posted on the Stripe Capital page

Summary

Stripe Capital is a new option for business owners looking for alternative financing. The company makes getting the financing needed to grow small and medium-sized businesses easy. Repayments are much more flexible than traditional loans. Instead of interest rates, you pay a single fixed fee, which can make comparing rates with other lenders more difficult. If you think a single fixed fee is more beneficial, however, Stripe Capital may be a good option for you. The biggest limiting factor is that you have to be a Stripe user to qualify. If you don’t use Stripe, or you don’t use a business platform that works with Stripe, then you cannot take out a Stripe Capital business loan.

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