Etsy's bank fails... what next?

[#1]

The collapse of Silicon Valley Bank today is awful news.  I wonder what this means for Etsy sellers and funds.  

https://www.wsj.com/articles/after-silicon-valley-bank-fails-tech-startups-race-to-meet-payroll-4ebd9c5c

[SheWhoPlaysWithGlass]

Switched my payout schedule to once a month, hopefully they can find a new bank.  I wonder if we will have to go through Plaid again.

[heartfeltgiver]

Following

[MBACosmetics]

Maybe Etsy should reactivate a payment option like direct Paypal that they took away a few years ago. At least it would be one way for sellers receiving some funds from sales in the meantime. 

[BazzysHouse]

They really should. 

[TheFreshener]

While it's clearly uncertain what's going to happen, I strongly advise not to listen to those saying to put your shop in vacation mode. Especially if it comes from someone with 11 sales in their store...

I always try to look at the bigger picture. And from how I see it, Etsy is a successful platform processing a loooot of transactions (and getting their cut from every single one...). Shutting it down just because of bank issues is simply not logical. They will find a way and if they don't, well there's always risk involved in doing commerce. It's just the nature of it.

[ProAdvert9]

100% agree! 

[bradgoodell]

@TheFreshener  Agreed.

[backyardprims]

I agree. 

[JuliesHeart]

I have always said that companies we choose to do business with should have a full disclosure of who they bank with and who they invest with and while you can do research and find some of these things out on your own, it should be provided in the legal docs you can peruse before deciding to sign up with them.

They need to know all about our banking and to me, it should go both ways......

[CraftyCornishMaids]

@JuliesHeart 

Etsy does not ask you all about where your money is, and who you invest with,

They only need the bank you want to put your deposit into

any other bank accounts, or investments you have elsewhere, they don't ask about

[bradgoodell]

@JuliesHeart 

Etsy is a corporation, so their finances are public.  But would you have known the SVB was going to be taken over by the FDIC?

This article talks about Etsy's finances, and has links if you want to know more.  But here is the jist:

https://www.eseller365.com/etsy-delays-seller-payouts-silicon-valley-bank/?fbclid=IwAR22ODntY0J6koTx...

Etsy Exposure to Silicon Valley Bank

Late in the afternoon, Etsy sellers on online forums began complaining that their scheduled payout for Friday, March 10 had been automatically delayed until Monday. Some people began to speculate that Etsy may be using SVB and that this massive delay was connected to the bank’s failure.

Now, Etsy issued an email to sellers confirming the reason their scheduled deposit was delayed due to “recent developments regarding Silicon Valley Bank, who Etsy uses to facilitate disbursement to some sellers.”

Etsy further said, “We are working with our other payment partners to issue your deposit as soon as possible.”

The company didn’t provide any further details on how large its exposure is to SVB. However, unlike VC backed startups and smaller tech firms that may have most of their funds in one bank, Etsy should have the financial resources to make sellers whole relatively quickly.

While affected sellers their payout information says March 13 now, the email from Etsy doesn’t offer that specific date. Sellers should expect that payouts could be delayed a little further, depending on how quickly Etsy can arrange for an alternative distribution solution.

For those worried about Etsy’s financial situation, let’s take a brief look at their last financial filings(Form 10-K).

At the end of 2022, the company had $1.2 billion in cash, cash equivalents, and short- and long-term investments. Of that, $921 million was in cash and cash equivalents.

In addition, Etsy has a revolving credit facility (credit line) of $200 million, which was still available in full at the end of the year. In other words, they weren’t using any of it.

Obviously, without knowing the exact exposure the company has to SVB, we believe Etsy should have enough financial resources to pay sellers. It finished the year off better than many of its peers.

Another good sign for sellers is that the company’s stock price has remained stable in after hours trading, further indicating that the “smart money” on Wall Street is not concerned as well.

[MissouriCrossing]

All banks are good until they ain’t.  

[backyardprims]

Even if I knew; It would not have made a difference.  No one knew they were going to go down (SVB) until they did. Etsy has been good to me. I’m thankful and will stay positive. 

[SugarTaffySoap]

The never ending emotional roller coaster with ecommerce.

[BazzysHouse]

 I still can not believe that they did not have accounts with BOA or JP Morgan. Yes I know Etsy is a e-commerce but they have been far from a tech start up for over a decade. 

[bradgoodell]

@BazzysHouse Likely they do.  Most large corporations have numerous bank accounts, and Etsy likely has bank accounts in other countries where they have offices.  They also have a variety of investments and a large line of credit.

It would be premature to assume all of Etsy's money was in one location.

[StonesAndLeatherUS]

We will have to see Monday. Etsy should be talking to us about this and they are not.

[HotOffHerHook]

I'd like to thank Brad for all the information he's put up.  I find him to be a voice of reason :).   CoquetteBath too.

[CastawayCottageFinds]

Reading through this reminds me of It's a Wonderful Life. Everyone wanted their money NOW. I'm picturing Etsy sellers pounding on the front windows of Etsy. Does Etsy have front windows? It's amazing how people can let themselves get into a rip roaring tizzy. Etsy is a massive company, with lawyers that could fill a stadium. They aren't going to go under because of the collapse of one bank. Now if the banking industry starts falling like dominoes, then there might be a problem. And that very well could happen. But after the great depression, regulations were put into place, and after the housing problems of the 80s, regulations were put into place. And CoquetteBath didn't lecture anyone, she simply stated a fact. It's the eggs in one basket thing. The owners putting their shops on vaca mode are just like the people pounding on the door of the savings and loan demanding their money. About two weeks ago my husband said that there will be some bank closings soon. He keeps up on all the business world news. How he knew that is beyond me because I don't understand any of it. But apparently it didn't surprise people who are savvy about the banking and business world. 

People should be more worried about the cost of groceries and energy. That's going to hurt them way more than Etsy waiting a couple of days to do payouts. 

[LegendaryStones]

This thread title is rather misleading and instigating, lol. "Etsy's" bank did not fail. A bank that Etsy happens to sometimes use has failed. SVB is  not the only source of money that Etsy has and the bank is insured. Article below from "e365": 

"For those worried about Etsy’s financial situation, let’s take a brief look at their last financial filings (Form 10-K).

At the end of 2022, the company had $1.2 billion in cash, cash equivalents, and short- and long-term investments. Of that, $921 million was in cash and cash equivalents.

In addition, Etsy has a revolving credit facility (credit line) of $200 million, which was still available in full at the end of the year. In other words, they weren’t using any of it.

Obviously, without knowing the exact exposure the company has to SVB, we believe Etsy should have enough financial resources to pay sellers. It finished the year off better than many of its peers.

Another good sign for sellers is that the company’s stock price has remained stable in after hours trading, further indicating that the “smart money” on Wall Street is not concerned as well."

[EarSugarHandmade]

Sellers didn’t get paid yesterday.  That’s a pretty big deal to those who count on getting paid.  I’m not misleading or instigating anything.  It’s a simple title.  
If someone said “I need to stop at my bank”, or “I need to stop at Bank of America” both would be accepted as they need to stop at the place they use for banking.  Would you correct them or accuse them of insinuating they own the bank? 

[CraftyCornishMaids]

etsy always say allow 5 days from sending to receiving, so 1 day is neither here nor there

[EarSugarHandmade]

Cornish that’s quite dismissive of anyone who was negatively impacted by a 1 day delay.  Let’s not pretend all Etsy sellers have their eggs spread out and plenty of money in their bank (hopefully not SVB) to cover it.  
These are paychecks and it’s not a secret that many many many people are living paycheck to paycheck right now.  I’m sure it is “here or there” to them.

You are experienced and likely in a fine position to handle it but does that mean we dismiss those who aren’t?  

(Etsy had also not confirmed this will only be 1 day delayed.  That’s an assumption.  We don’t know how long the delay will be yet.  They said they’ll let us know when it’s resolved.)

[CraftyCornishMaids]

@EarSugarHandmade 

etsy have had regular problems with payment providers, they have in their terms, that it can normally take up to 5 days, and it has taken 10 before, on quite a few occasions

If anyone sells here, they should absolutely allow for that as a minimum,

that is just for "normal" glitches. 

and have something else as a standby, in case it takes longer,
or etsy puts us on reserve,
or our credit card expires,
or twe have problems verifying our account,
or etsy inadvertently suspends our shop,
or deliberately de-indexes us 
or the market we sell in changes
or etsy decides to remove our best seller from search
..... etc

There are other things outside of our control too
In the UK, we had the cyber attack, which meant we couldn't actually send/sell overseas for 2/3 weeks
and we also had strikes which seriously disrupted sending anything by post, forcing many to shut shop for a while, or refund without recompense, in our busiest season.
In the USA, there has been a bank collapse

things happen 

It's the sellers decision to have a "fighting fund" to allow for cashflow disruption or not, because it will, and does, happen,
it's down to the sellers assessment of the risk they can take.

I advocate selling on more than 1 platform, to mitigate risk,
and also have a contingency fund, if the seller  experiences problems if there is disruption to payments.

This is not a new thing I have just started to say, I have always recommended this,
it's standard business practice, whether you are a 1 person self employed, or a large company

It is a sellers choice,
if we can't handle a couple of weeks disruption to cashflow, then selling online is probably not the thing we should be depending on.
It is a big risk to take, and it will happen at some time, as it has before

[DecoratingStudio]

A company as large as Etsy works with several banks.  SVB was just one of them.  Etsy will pay us once they reroute the payments to come from another bank.  We will get paid by Etsy - but, Etsy may not be able to recover all their funds that were at SVB.