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Comment by laurentb | Hacker News Reader

In this case, then surely showing a calculator straight on the page allowing people to see what APR they would get based on their payment/sales configuration would make the whole process more transparent and easier to understand by people who might not be savvy enough to understand the nuances then?

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Yeah, we've iterated a lot (and done a lot of customer interviews) to try to figure how to make the presentation as simple-to-understand as possible. It's hard to show a (de facto) APR precisely because it will depend on your subsequent sales. (And showing it could even be confusing because there's no compounding with our fee structure.) All that said, one of the key questions we care about when speaking with customers, prospective and current, is "Are the terms clear?". And if coming up with some kind of APR-equivalent modeling thing helps achieve that, we'll do it!

The issue is comparison, a lot of customers are going to have to build their own spreadsheets to try and compare the terms with alternatives. What you have is basically the industry standard for this form of capital, but definitely an opportunity to do better with transparency.

Provide a tool that show's the loan repayment based on historical data e.g. a scenario.

Let me go back 12 months, pretend I took a loan of $X amount at Y date and simulate the repayment based on a customers actual historical data.

I have worked in the small business lending space before. Stripe cannot price in terms of APR because legally, it is not a "loan". It's a purchase of future receivables. If it was a loan, the APR would be considered usurious in most states.

> legally, it is not a "loan". It's a purchase of future receivables.

Interesting. From this perspective, Stripe is actually getting into the factoring business: https://en.wikipedia.org/wiki/Factoring_(finance)

As @pc has been active here, I'd love to hear from him on this - in legal terms, according to your lawyers, is Stripe Capital considered a loan?

I'm definitely not a lawyer, but I work at Stripe. Capital works a bit differently. Yes, we offer loans, but we also offer cash advances (with a focus on loans right now). They're pretty similar—repayment via your sales, fast funding, a fixed fee with no interest, and a streamlined application, to name a few things. When we make an offer, we’ll make clear if it’s actually a loan or cash advance (and what that means for your business).

In most states aren't loans for commercial purposes (or to certain kinds of entities [c-corps, llcs, partnerships] assumed to be commercial) are exempted from usury restrictions?

Why is everyone using the term APR? It's not compound interest. If I take 2 or 3 or 5 years to pay back, I don't get charged more. The cost of the loan is fixed at 10% of the principal, regardless of how long you take to pay it back. There's no compounding, so using the term APR makes it sound nefarious when it isn't.

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