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Comment by harshadante | Hacker News Reader

Harsha from the Stripe Capital team here. We’ve designed the program so that most offers take about 8-12 months to pay back, and therefore the repayment rate would change to reflect that projected duration (which would ultimately impact the APR). The 15% repayment rate you see on the landing page is just an example.

We do think this is a significantly improved overall user experience—it works straight out of your Stripe account. It’s automatic, based on your sales. The cost of the loan is a single fixed fee that adjusts to the loan amount paid over the course of the loan—there is no interest rate or additional fees. The effective APR is dependent on how long it takes to repay the loan.

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This is really unclear from the landing page, but seems like crucial info. It's also not mentioned on the FAQ page from what I can tell. Might be good to add somewhere.

Are there any common scenarios among Stripe users/repayment schedules where the effective APR would be advantageous compared to a traditional loan (convenience of application process notwithstanding)?

> about 8-12 months to pay back

Wow, that's a whopping 10-15% p.a. interest rate. Time to mint the money has come for Stripe, yeah?

As said by Patrick in a different comment, it really depends on how your sales are going therefore comparing it to a traditional loan with a fixed p.a. regardless of your sales doesn't make a lot of sense.

I didn't read the exact terms, but based on the landing page it seems like your downside is capped, which is a big thing. I.e. if you suddenly stop making sales, you don't repay them . (not sure if there's a clause that makes you repay if you never make sales for a couple of years after taking out the loan)

For a mom & pop store without a personal guarantee 10-15% is an excellent rate. If there's a personal guarantee attached then 10-15% is a terrible rate.

It's worth mentioning that many small businesses can't get SMB loans that cheap (if at all), and can also earn a higher return on each dollar reinvested in their business.

In the early stages of an internet-enabled, distribution-bound company, 1 dollar reinvested (say in ad spend) can net you 1.5-2 dollars in increased sales. So even at a quite high APR, it's still a net win for many companies to take that debt on.

Obviously you'd rather take on debt at a lower APR, but if your risk of default is high, nobody is going to give you a low APR.

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