Stripe Inc. has recruited peer-to-peer financing provider Funding Circle to extend loans to merchants using Stripe to process payments. The London-based lender has joined the Stripe Partner Program, allowing merchants to apply for loans up to $500,000 by uploading data that can support their application.
San Francisco-based Stripe says it processes online payments and supports other technology for what it says are “millions” of merchants. By recruiting Funding Circle, Stripe can also compete more directly with Square Inc., which offers a funding program called Square Capital.
“We’re excited to welcome Funding Circle into our vibrant ecosystem of partners that amplifies the value of Stripe to our users,” said Vicki Lin, head of ecosystem at Stripe, in a statement. “With this partnership, Funding Circle will reach the millions of businesses on Stripe to provide more effective options for financing, and will help us in our mission to increase the [gross national product] of the internet.”
Nine-year-old Funding Circle offers fixed-rate loans with terms ranging from six months to five years. It says U.S. businesses have so far borrowed $1.9 billion, and claims that makes it the largest such platform in the United States. Loans, which are funded by individual investors, have totaled $8.6 billion so far, the firm says. Some 62,000 small businesses have received loans.
Processors like lending programs because they attract and retain small merchants by tying them more closely to the payments service. A leading example is Square Capital, which Square launched in May 2014. This program, however, differs from Funding Circle’s approach in that it extends cash advances that are based on the dollar volume merchants process through Square.