Stripe Launches Online Loan Ecosystem Through Stripe Capital

Need to Know

• Stripe Capital, the enterprise wing of payments processor Stripe, will now allow online platforms to offer financing to their customers.
• Stripe Capital will provide businesses with an end-to-end lending API which enables platforms to issue loans to online merchants, without having to build their own lending solution.
• Jobber, the home service management software provider, and Lightspeed, a POS platform, have already signed up for the new Stripe Capital service.

Analysis

Stripe, the massive payments processor, has expanded its Stripe Capital roster of tools, launching a new service that allows businesses that operate via an online platform to offer loans to their customers.

Stripe Capital, which launched in 2019, currently offers its own customers and business clients access to financing solutions. This next step allows those clients to offer loans to their customers via an end-to-end lending API, eliminating the need for Stripe Capital customers to build out a lending solution themselves. The ability to issue loans is meant to allow Stripe Capital’s clients to give their customers quick cash infusions at a time when many traditional banks are scaling back their own small-business lending programs.

“Mundane though it sounds, access to capital is the primary bottleneck that limits the growth and expansion of most small businesses,” Stripe co-founder and President John Collison posted in a tweet on Tuesday. “So we built Capital for platforms. Help your customers grow faster by using our lending infrastructure.”

Loans from Stripe Capital’s lending program are issued by bank partners, and funds arrive in customers’ accounts within one to two days of approval. Repayment is automatic, but businesses that issue loans via the program accept no liability for credit losses: all credit losses are absorbed by Stripe Capital.

Two Stripe Capital customers have already signed up for the new loans program: Jobber, which is a home service management platform, will offer loans to its home-service providers; and Lightspeed, a POS platform service, will also make loans available to its customers via Stripe Capital in a program it is calling Lightspeed Capital.

“Lightspeed retailers have always outperformed the broader industry and this has been more apparent than ever during COVID-19 as these innovative merchants have leveraged omnichannel solutions to meet customer demand,” said Dax Dasilva, founder and CEO of Lightspeed, in a statement announcing the new loans program. “The introduction of Lightspeed Capital is one more tool to help them digitally transform their business and continue to outpace the industry.”

The introduction of Stripe Capital loans for online platforms caps off a strong year for Stripe, as online and digital payments spiked in popularity during the COVID-19 pandemic. Last week, the company was valued at a whopping $100-billion, making Stripe—which is still privately held—one of the world’s most valuable startups.