You may have heard the news of SVB Bank collapsing in the US and that the UK Government worked over the weekend to facilitate a rescue deal of the UK subsidiary with HSBC stepping in to buy their operations for just £1. What you may have missed is the impact on ecommerce and some of the biggest names in the business.
Etsy were one who felt the impact of the SVB Bank failure with payments to some of their merchants delayed over the weekend. Only around 2,700 merchants were impacted but the panic quickly spread. There are also a small number of Etsy sellers who banked with the failed bank who Etsy still can’t pay.
Other businesses such as Shopify also have merchants who have their finance with SVB Bank and Shopify notified them they would need to provide an alternative bank before they could receive payments. Shopify also bank with the failed business as one of around a dozen banks in the US and Canada and although a small proportion of their funds are tied up, it shouldn’t impact their overall operations.
Shopify Capital, which provides advance funds to merchants, were impacted with merchants unable to see loan offers or repayments on their website.
Larger businesses like Etsy and Shopify routinely use multiple banks which will have limited the impact, but smaller businesses will often only have a single bank account and for those that banked with SVB Bank it’s been devastating – it’s not easy to instantly open a new bank account, especially while your funds are tied up in a failed bank. Operating cash to pay invoice due and for payroll are needed instantly and even once a new bank account is opened it’s unlikely that cash flow will cover all outgoings.