How Stripe Capital for Platforms worksPrivate preview
Learn the basics of Stripe Capital for Platforms.
Before you begin using Stripe Capital, familiarise yourself with the eligibility requirements, lending process, and structure of financing offers.
Capital eligibility
Stripe determines eligibility and financing terms for each user based on their payment activity on Stripe. We automatically determine eligibility as set by our bank partner on a daily basis and without action from your platform. While our goal is to offer access to financing to as many users (connected accounts) as possible, not all users will be eligible for financing.
Stripe Capital is currently limited to businesses that:
- Are based in the US (non-US persons might still qualify if their legal entity is US-based).
- Are for-profit. Additional restrictions might apply to government, utility, and travel businesses. Email capital-review@stripe.com if your users fit within the non-profit category.
- Have an email address linked to their Stripe account (necessary for marketing and ongoing servicing). Many Connect platforms don’t automatically provide linked email addresses for their users to Stripe. The Stripe Capital team can work with you to upload and manage these email addresses if your platform doesn’t automatically share emails with Stripe.
Capital lending process
Capital uses Stripe’s existing knowledge about your user’s business to offer an end-to-end lending process. The following are the five phases of the process:
| Phase | Description |
|---|---|
| Risk and underwriting | Stripe Capital automatically underwrites a user based on their Stripe transaction history and volume. This means each user that receives an offer is already pre-qualified for their loan. |
| Offer and applications | Notify eligible customers with Stripe’s no-code email service or build custom notifications in your own site with the Capital API. All offers link to a co-branded application flow hosted by Stripe. Relevant business information is pre-populated for your user to review for a quick application process. |
| Fund disbursement | Stripe handles sourcing all Capital funds and deposits them to your user’s Stripe account within 2 business days. |
| Repayment | Repayment is fully automated and adjusts to daily sales. Stripe deducts a fixed percentage from each of your user’s sales until they completely repay the total they owe. |
| Servicing and collections | Stripe handles servicing and collections if a user fails to satisfy on-time payments. |
Capital offer structure
Each financing offer has four components:
| Offer component | Definition |
|---|---|
| Principal amount | The amount the account is pre-qualified to receive |
| Repayment rate | The percentage of each future transaction to be withheld for repayment |
| Premium amount | A flat fee on top of the principal amount that the connected account user must pay back |
| Minimum payment | A minimum amount that must be paid over a specific time period, usually 60 days |
For example, if there is a financing offer for 20,000 USD at a 15% repayment rate with a 2,000 USD flat fee, the loan will have a 2,444.45 USD, 60-day minimum payment. After the application is reviewed and approved, the user receives a 20,000 USD payout and Stripe Capital withholds 15% of each transaction processed through Stripe until the user pays back the full outstanding balance of 22,000 USD. If the user misses a minimum payment, Stripe automatically debits them the remaining balance for the relevant time period.
See how this example offer appears in the co-branded application flow:
A user’s financing offer. All loans are issued by Celtic Bank
Capital collections
A loan is characterised as delinquent – and its delinquency level increases – each time any scheduled loan payment remains unpaid by the next minimum due date. A scheduled loan payment is missed when an unsuccessful ACH debit attempt occurs due to insufficient funds in the related bank account, closure of the related bank account, revoked access to the ACH account, or any event resulting in non-payment of scheduled loan minimum payments. Once an account becomes delinquent, the automated loan payment collection process implements specific business rules to collect overdue payments. Alongside the automated collection process, the loan enters a recovery-focused collection queue once it becomes delinquent.
Stripe Capital has designed a collection process strategy for delinquent loans. Stripe Capital tries to contact all users who haven’t met or risk not satisfying their minimum payments, making sure these contacts comply with professional standards and legal regulations. Collection representatives work with users to try to maintain a business relationship and satisfy minimum payments according to the contractual agreement outlined in the loan agreement.
As part of our strategy to aid users facing business challenges, Stripe Capital may offer extended payment plans to help users make smaller payments and meet their loan obligations. Users who wish to discuss their financial obligations can contact Stripe Capital at capital-support@stripe.com.
Eligibility for payment plans is determined by several factors, including a:
- user’s delinquency level.
- user’s possession of a debitable bank account on file with Stripe.
- user’s ability to make a qualifying payment.
- user’s bankruptcy status.
- user’s ability to pay off balance with terms not exceeding 50% of the original loan terms.