It’s been a stressful few days for anyone with money stuck in the Silicon Valley bank meltdown. And while coordinated federal action hopes to minimize the crisis and make depositors whole, the short-term pain of the second-largest banking meltdown in American history is trickling down to some independent designers.
At the end of last week Etsy began notifying “certain sellers” that there would be delays in processing scheduled payments. According to a email shared by an Etsy seller On Twitter, the e-commerce platform attributed the issue to “recent developments regarding Silicon Valley Bank, which Etsy is using to facilitate disbursement to certain sellers.”
The uncertainty is undoubtedly a nerve-wracking time for independent designers who depend on income from Etsy. But according to information the company provided to Tech Crunchonly about 0.5% of its sellers encountered payment problems on Friday, a day after major venture capital firms and other Silicon Valley Bank clients withdrew a total of $42 billion of their Bank accounts.
“At Etsy, supporting our sellers is our top priority, and we understand how important it is for these small businesses to be able to receive their funds when they need them,” an Etsy spokesperson told TechCrunch. “We plan to pay sellers through our other payment partners and begin processing these payments as early as March 13.”
Although Etsy’s statement says a fix for the issue is already underway, that hasn’t deterred some sellers from hitting pause until there’s more clarity on when and how to payment processing. Some designers have speculated that stores can choose to activate “holiday mode” and pause selling items and fulfilling orders until there is more clarity around payments. For some, the potential alternative of doing business as usual when it does not generate timely revenue is a worse alternative.
“I have unshipped orders that I haven’t received funds for,” said Alison Ugur, an Etsy seller. The edge. “If I ship them tomorrow before my payment arrives, will I be paid for my work, and when?”
On Sunday, the Federal Reserve, the Federal Deposit Insurance Corporation and the Treasury Department released a statement confirming that they would step in to assure Silicon Valley Bank depositors that their funds will be available. At this point, it’s possible that only Etsy sellers who receive daily or weekly payments (as opposed to bi-weekly or monthly payments) will be affected. While big names in the tech world like Roku and Roblox had greater exposure at the now-defunct Silicon Valley Bank, it’s unclear to what extent other design-centric platforms’ payment processing services may have been impacted. Either way, for businesses of all kinds, the collapse of Silicon Valley Bank will likely be a wake-up call to multiply their banking partners.
As the Federal Reserve takes action, including a term bank funding program, which allows banks to borrow large sums on favorable terms, the hope is that the fallout from the collapse can be contained. But for Etsy sellers and startup employees coast to coast, the upcoming payday will hopefully come with more palpable relief than usual.
