Have You Been Declined By Stripe Capital? Here's What To Do
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The Holy Trinity of payment processors are PayPal, Square, and Stripe. As of September 2019, all three offer their own business financing services. The last to join the club was Stripe, and it’s easy to see why they waited so long. Compared to PayPal Working Capital and Square Capital, Stripe Capital is designed for a more specific type of customer. It seems to outperform its top competitors in several areas, one of which is the main reason these processors were able to grow so quickly in the first place.

Still, Stripe Capital has a lot in common with the other two options, and it shares its target audience with a number of business financing companies. In other words, the businesses that wouldn’t be pleased with PayPal Working Capital and Square Capital would probably feel the same way about Stripe Capital. And the primary advantages of using Stripe Capital can certainly be found elsewhere if you just look a little harder.

Before we get to those options, let’s go over the pros and cons of Stripe Capital:

Stripe Capital is Quick and Easy

As you’d expect, Stripe Capital is only available for businesses that currently use Stripe’s payment processing platform. This allows Stripe to approve applications for funding very quickly. If you use Stripe to process payments, most of the financial data you would need for a traditional loan application is already in their system. The applicant does not have to fill out forms or compile stacks of documents. Submitting an application for Stripe Capital requires hardly any manual effort.

After receiving the application, Stripe’s machine learning models review the applicant’s transaction history. The fate of the application, along with the terms, rates and borrowing amounts, are determined entirely by artificial intelligence and computer algorithms. Human beings have no role in the approval process.

Any business with tumultuous cash flow, however, knows where artificial intelligence falls short.

Stripe Capital Leaves Decisions Up To AI

If your cash flow remains stable all throughout the year, Stripe Capital will probably make you a fairly generous offer in under 24 hours. But if your cash flow fluctuates from time to time, Stripe’s computer algorithms may automatically conclude that you won’t be able to make regular payments. It doesn’t matter if those fluctuations are industry-wide or beyond your control. A computer algorithm can’t exactly look at cash flow data and go, “Well, business usually slows down during those months, so the dip in revenue makes sense.”

Businesses with tumultuous cash flow can often get better offers from companies that don’t rely on computer algorithms to approve applications and develop loan terms. These situations require living, breathing financing professionals who have spent years working with historically unstable industries. Sometimes, numerical data is not the most accurate indicator of a business’s future, nor the aptitude of its owner.

Ecommerce Businesses: You Have Options

Unlike PayPal and Square, Stripe Capital has made it abundantly clear that their target audience is Ecommerce. This seems to be why Stripe waited so long to launch Stripe Capital: to give Ecommerce more time to grow. Many Ecommerce businesses use Stripe solely because it’s so easy to integrate into their sales systems. Stripe Capital offers the same level of simplicity for Stripe customers.

Ecommerce businesses may also have trouble obtaining financing from traditional institutions that usually work with brick-and-mortar shops. Their lack of expensive assets renders them unable to provide collateral. They also don’t have the time to go through the traditional loan application process.

But Stripe is not the only source of financing that understands the unique challenges of Ecommerce businesses. Plenty of alternative business financing companies have significant experience with Ecommerce clients of all sizes. There’s usually no need for collateral, and new clients don’t have to wait three days for funding if they need it in under 48 hours.

Can Other Companies Match Stripe Capital’s Speed?

Stripe customers might see slightly faster approval times from Stripe Capital because, technically speaking, they aren’t first-time borrowers. Several other companies, however, can literally approve additional rounds of funding for returning borrowers in a matter of hours.

And unlike Stripe, those returning borrowers won’t have to worry about being rejected for historically tumultuous cash flow. Once someone proves their ability to pay off debt without trouble, there’s little risk in approving additional rounds of funding. Stripe’s speedy approvals come from computer algorithms. Even if you paid back your first loan on time, the algorithm might still reject your second loan if your cash flow looks too rocky.

Simplicity Is Not Hard To Find Anymore

Businesses that favor PayPal, Square or Stripe over other merchant services tend to prioritize simplicity. They might not offer the cheapest rates, but the simplicity of their cost structure and integration process is unparalleled.

It’s completely understandable for any business to want quick and easy funding, and the business financing industry knows that. Thus, simplicity should not be the only reason to choose Stripe Capital, nor any source of financing. Stripe is just one of many companies that can meet the time-sensitive needs of Ecommerce businesses.

If your business requires additional funding to act quickly and continuously serve your customers, always remember: you’re not alone.

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