How Stripe Capital works

Stripe Capital offers financing for eligible users processing payments through Stripe. Under the Stripe Capital program, business financing doesn’t have late fees, early payment fees, or origination fees. Instead, the total amount you pay is your advance amount plus a flat fee. Your payments are withheld directly from your sales on Stripe.

Eligibility and financing types

Stripe uses a combination of eligibility criteria (including overall processing volume and history on Stripe) to extend a financing offer. If your US business is eligible, and has at least three months of processing history, Stripe might send you an email and Dashboard notification to advise you of an available offer.

Each offer specifies the type of financing being offered, which might be a loan or merchant cash advance. You can’t request a particular financing type under the Stripe Capital program.

• Merchant cash advance: A merchant cash advance is a purchase of a merchant’s future receivables by YouLend; it’s not a loan or credit transaction. Purchased receivables are withheld from the merchant’s payment processing volume in a percentage specified in the YouLend Advance Agreement. Unlike a loan, there’s no fixed payment schedule or periodic debits. Instead, a merchant’s payments vary based on payment processing volumes.
• Loans: Business-purpose term loans are made by Celtic Bank to eligible merchants. These loans have a maximum term, and periodic payments. If withholdings from payment processing receivables don’t meet a minimum amount (typically on a 30 or 60-day basis), shortfalls are debited from a linked bank account.

Review your offer

Your offer is typically valid for 30 days, after which we re-evaluate your business to see if you’re eligible for an additional offer. Go to the Capital tab in the Stripe Dashboard to customize the amount of your offer up to the maximum offer amount. The offer terms adjust based on the amount you choose. If you’re seeking financing at a later time, continue checking your email and the Capital tab of the Dashboard to make sure you’re reviewing your most current offer. In some cases, we extend additional offers to you while you’re actively paying your current financing.

After you select an offer, we review your application. There might be requests for additional information related to your business to complete the review of your application. If you’re approved, we transfer the funds to your Stripe account, typically in as few as 1-2 business days. To make sure funds successfully disburse from your Stripe account, you must set a valid bank account as your primary payout method.

No impact to your personal credit

Applying for financing through Stripe Capital might require a personal credit check under some circumstances, but this credit check doesn’t affect your personal credit score.

Build your business credit history

When you apply for financing through Stripe Capital, Stripe might obtain your business’s credit history through the Small Business Financial Exchange.

Additionally, Stripe Capital may report performance or payment history to the Small Business Financial Exchange, who uses this information to build a financial profile for your business, which can help your business get access to financing from other providers.

Linked accounts

You always have control over the bank accounts that you share with Stripe and can update or disconnect your linked accounts at any time.

Pay down your financing

The total cost of your financing is your loan or advance amount plus a flat fee. Payment of your financing occurs automatically by deducting a percentage of your Stripe sales, known as the repayment rate. This means you pay more when your business has higher sales and less if business slows down. The single flat fee isn’t charged upfront—it’s paid over the length of the financing.

There’s no prepayment penalty, and you can make additional payments or pay the total amount you owe in full at any point in the Capital tab of your Dashboard.

Stripe automatically evaluates you for a new offer as you pay down your financing, regardless of whether you make additional payments or pay it off early.

Financing payments

Stripe Capital financing is generally paid through withholding from payment processing receivables at a rate specified in your financing agreement. Depending on your financing type, there may be periodic minimum payment requirements and a finite term.

Specifically, if you took out a loan, you must repay a minimum amount toward your loan every payment period. Amounts withheld as a percentage of your sales at the payment rate count toward your minimum. However, if the total amount you repay through sales doesn’t meet the minimum, you must pay the remaining amount at the end of the period. If you haven’t met the minimum by the end of each payment period, Stripe automatically debits the balance needed to meet your minimum from your bank account or account balance. You can also make manual payments toward your minimum through your Dashboard.

You can view your minimum in the Capital tab of your Dashboard or in your loan agreement.

If you’re unable to meet your minimum for one or more periods, reach out to support and we’ll work with you to get back on track and meet your loan obligations. If you continue to miss your minimums, we might take additional action, as detailed in your loan agreement.

Examples

The following example scenarios demonstrate how the minimum payment process works for loans.

Example 1: You successfully meet your minimum through daily sales deductions.

• Your minimum amount is 2,000 USD for the 60-day period ending on March 1.
• In that period, you repaid 2,500 USD of your loan balance through Stripe deducting a fixed percentage of your sales volume (the repayment rate).
• You’ve successfully met your minimum plus an additional 500 USD toward your total balance for this payment period.
• In the next 60-day period, you still must meet the minimum of 2,000 USD.

Example 2: You don’t meet your minimum through daily sales deductions.

• Your minimum is 2,000 USD for the 60-day period ending on March 1.
• In that period, you repaid 1,500 USD of your loan balance through Stripe deducting a fixed percentage of your sales volume (the repayment rate).
• On March 1, you still owe 500 USD toward your minimum (2,000 USD – 1,500 USD = 500 USD) and you must pay the remaining balance of your minimum.
• On March 1, Stripe automatically debits 500 USD from your bank account or account balance to meet your minimum.

Security interests

Stripe Capital loan agreements typically include security interests taken as collateral for your loan. A UCC-1 financing statement might be filed in connection with your loan based on several factors, including the size of your loan, facts and circumstances about your business, and so on. After you finish paying off your loan, you can contact us with a request to terminate a UCC-1 filing.

For merchant cash advances, a security interest may be taken under certain circumstances, as specified in the Stripe Capital advance agreement.

Taxes

Tax reporting often depends on your specific situation, so we encourage you to talk with a tax advisor. In general, funds through Stripe Capital wouldn’t be considered taxable income at the time of receipt, and the amounts withheld to satisfy your obligations aren’t tax deductible.

Stripe Capital loans are issued by Celtic Bank, powered by Stripe. Stripe Capital merchant cash advances are provided by YouLend.