Digital payments firm Stripe has launched a new arm called Stripe Capital to foray into small business lending.

With the new lending platform, the company aims to cater to online businesses which do not have access to conventional borrowing channels.

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Currently, Stripe Capital is available for all Stripe users in the US. Besides businesses running on Stripe directly, the service will be available to platforms and marketplaces on Stripe Connect.

According to the company, the new lending service reduces lengthy application process and collateral obligations.

It determines loan eligibility of the applicant based on its history on Stripe. It procures data from its business network and subsequently advanced algorithms assess various business attributes to measure repayment capabilities.

Approved funds will be credited to the business’ Stripe account the next day.

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Additionally, the repayments are automated, enabling businesses to repay the money as a fixed percentage of their daily sales.

There are no recurring interest charges or late fees.

Stripe chief product officer Will Gaybrick said: “Stripe Capital makes it easy for internet businesses to get the funds they need, when they need them.

“It’s important to think about financial inclusion not just in terms of consumers, but also in terms of businesses.

“Businesses, especially small businesses and startups, are the engines for job creation in our economy. It should be trivially simple and lightning fast for them to access the capital they need to smooth their cash flow and invest in their own growth.”