Parafin is joining Stripe

Today, we're excited to share that Parafin has reached an agreement to be acquired by Stripe. Together, we're going to make it faster and easier for small and medium businesses to get the financing they need to thrive.

Why we started Parafin

We started Parafin in 2020 with a simple observation that the businesses powering the economy such as restaurants, auto shops, salons, contractors, are the ones the traditional financial system has the most trouble serving. Businesses can finance their growth in one of three ways: reinvesting their earnings, selling equity, or borrowing. The earnings option alone limits the rate of growth. The equity option is available to a minor and increasingly shrinking percentage of businesses. This leaves credit as the realistic option for almost everyone else. Banks underwrite SMBs with processes designed for large companies and often require personal credit scores. The result is that the average SMB spends weeks applying for financing, commingling personal and business liability, and is more likely than not to be turned away. Not because it isn't creditworthy, but because the system to assess it is broken.

Our insight was that the software platforms these businesses run on, such as their point-of-sale, their delivery marketplace, their booking software or their payroll provider, see what banks don’t. This data helps assess a business’s health in a way a personal credit score could not.

So, we built the infrastructure to let any platform embed financing directly into its product with just one integration. Businesses on that platform get a pre-approved offer, funded in as little as a day, and with repayments that flex with their sales. No personal guarantees, no compounding interest, no lengthy processes. Financing that shows up on the platform the SMB already trusts.

What we've built

Six years later, that infrastructure powers financing programs for some of the world's largest platforms: DoorDash, Amazon, Gusto, SpotOn, Fullsteam, Jobber, and dozens more, serving every major vertical in the US economy. We've funded over $3B to over 60,000 SMBs across the US, and we've expanded from our first cash advance in 2021 to a full suite of products comprising flexible and term loans, business-to-business pay-over-time, and credit cards. All embedded, all underwritten on real sales data, all built so platforms can offer them under their own brand in weeks rather than years.

What we're proudest of isn't the volume. It's that the typical business we fund is exactly the one incumbents overlook, and that those businesses come back and keep growing.

Why Stripe

When we met the Stripe team, we saw how closely our missions aligned. Stripe has spent over fifteen years making it radically easier for businesses to sell online. We've spent six making it radically easier for them to grow once they do. Stripe's mission is to increase the GDP of the internet. Ours is to grow the SMBs that make up a lot of it. This is a shared vision, approached from two directions.

Joining Stripe will accelerate everything on our roadmap. Stripe works with millions of businesses and the platforms that serve them, in markets beyond our reach today. Its financial infrastructure spanning payments, treasury, issuing, billing, and stablecoins provides an unrivaled opportunity to offer business financing products. Its scale and operational excellence will enable us to address the market demand with an even bigger impact. And culturally, we found the same DNA that made us start Parafin: an obsession with craft, with APIs that hide enormous complexity behind simple interfaces, and with the unglamorous, compounding work of financial infrastructure.

With Stripe's reach and resources, business financing stops being a feature that a handful of sophisticated platforms offer and becomes something every platform can turn on and every SMB can expect.

What this means for our partners and their customers

Our work with you continues. Same products, same commitments and the same obsessive support. Just better. Offers, outstanding financing, and repayment terms are unaffected, and our combined scale and commitment will allow us to test more often, learn faster, and turn what works into better options for the platforms and businesses we serve.

Thank you

To our partners, you bet on a new model for business financing before it was obvious. To over 60,000 SMB owners who took a Parafin offer and built something with it, you're the reason this company exists. To our investors, who backed us from the whiteboard to this milestone, thank you for your conviction. And to the Parafin team, the most talented, mission-driven group of people we've ever worked with, this is your achievement, and we're just getting started.

We started Parafin because we believed SMBs deserve financial products as good as the ones big companies enjoy. Inside Stripe, we will get to help more businesses as we pursue this endeavor at an even greater scale.

Onwards,

Sahill, Vineet, and the Parafin team

The proposed transaction is expected to close in the coming months, subject to customary closing conditions, including any required regulatory clearances.