Working capital is the lifeblood of any business. For small businesses, getting loans is not easy, especially for those that do not have a banking or credit history for lenders to assess. However, payments transaction data shows a company’s sales history and trends, and that can serve as a reliable indicator of the ability for a business to pay back its loans.
Payments vendors are cashing in on this business need, and now Stripe has introduced Stripe Capital for this lending service. Stripe joins other payments enablers, such as Square and PayPal, in offering loans to its small business merchants. A new Mercator report, Square and Clover Delivering Merchant Services Beyond Payment Acceptance, discusses how payments vendors can expand client relationships by offering value-added business tools and services.
A Yahoo Finance article, excerpted below, covers the topic further:
Stripe, the San Francisco-based payments technology provider, is launching a lending service for “internet companies” to get faster access to funds. The lending service will initially be offered to U.S.-based companies and will focus primarily on online businesses such as e-commerce companies and software providers.
According to Stripe, Stripe Capital will determine loan eligibility by leveraging data from its “extensive business network, advanced algorithms analyze hundreds of relevant signals for each business, including payment volume, percentage of repeat customers, payment frequency, and changes in revenue growth.” Loans from Stripe Capital will be repaid with a fixed percentage of daily sales via Stripe’s payment platform.
“Stripe Capital makes it easy for internet businesses to get the funds they need, when they need them,” said Will Gaybrick, Stripe’s Chief Product Officer. “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.”
Overview by Raymond Pucci, Director of Merchant Services at Mercator Advisory Group