Etsy sellers fear they won’t be able to pay their bills after the online marketplace was forced to freeze transactions following the collapse of Silicon Valley Bank.
SVB on Friday became the largest bank to fail since the 2008 financial crisis, prompting investors to rush to get their money back.
But the collapse has not only hit wealthy tech entrepreneurs, a wave of small business owners have also been caught in the crossfire.
Dozens of mompreneurs were stunned to discover they wouldn’t be paid yesterday marketplace Etsy has announced that it is unable to process some sales payments because it uses Silicon Valley Bank to distribute funds.
Furious vendors took to social media to complain, with a panicked mother of three saying she “needs that money to feed my family and pay my bills.” Another revealed that she wouldn’t be able to pay her mortgage next week if the problem wasn’t resolved soon.
A small business owner said she couldn’t afford to pay her mortgage in a few days because of the freeze on her payments
“I’ve owned an Etsy shop since 2015, I’m doing really well on Etsy,” the woman said on TikTok.
“I noticed today that my money that should have been deposited to be available tomorrow was never sent to my checking account.
“Then I get an email saying they can’t make my deposit because of Silicon Valley Bank. My money, which I worked hard for, they can’t send to my bank account.
“They can’t send me the money I expected to have in my bank account tomorrow. Why is that my problem?’
She added, “I have to pay my mortgage in a few days and I can’t because they have my money on hold.”
Entrepreneur Amber, who runs personalized gift company Little Miss Lovely Creations, said she was “freaked out” by the news.
“I’m a mother of three, I run a small business, I do this from my home,” she said in a TikTok video.
“That money will feed my family and pay my bills.”
She added, “Fingers crossed we get our money on Monday.”
Panic rocked the financial sector on Friday after the sudden collapse of the SVB.
Deposits up to $250,000 are protected by federal law – but anyone with larger amounts now tied up will lose their money.
Dozens of customers were filmed yesterday queuing outside a branch to withdraw whatever money they had to get out before the disaster struck.
Meanwhile, police were called to the bank’s headquarters after a group of disgruntled tech founders showed up on their doorstep.
On Friday, Etsy had to email its sellers to inform them that their payments were being frozen because the company relied on the bank for some of its accounts.
“We just wanted to let you know there’s been a delay with your deposit that was scheduled for today,” the email reads to sellers.
Ohio entrepreneur Amanda Nielson told Dailymail.com she may be forced to close her Etsy account — where most of her sales come from — if the issue isn’t resolved soon
Nielson runs the business with her husband Sean, 54. She said she felt “helpless” when she heard the news on Friday night because she can’t do anything over the weekend.
This delay was caused by recent developments regarding Silicon Valley Bank, which Etsy is using to facilitate payouts to some sellers.
“We work with our other payment partners to process your deposit as quickly as possible.”
Etsy’s share price stood at $105.98 yesterday, after falling 12.52 percent over the past week.
Amanda Nielson, 45, of Ohio, who runs her soap shop Flower and Earth primarily through Etsy, said she was extremely frustrated that the email arrived on a Friday night.
“It’s the worst time to get those kinds of emails because you can’t do anything for two days. You feel helpless,” she told Dailymail.com
“I’m still getting orders now and I don’t know when they’re going to be paid.”
Nielson runs the business with her husband Sean, 54.
She said they can survive without the money in the short term, but she fears she will have to close shop.
“Virtually all of my sales are through Etsy. I have another site, but I thought about taking it down because pretty much everything comes through Etsy,” she said.
If this is not resolved soon I will have to close my Etsy account as I cannot take the risk of processing orders without knowing when I will be paid.
Dailymail.com has reached out to Etsy for comment.
It comes after it emerged that in 2015 the beleaguered bank’s CEO successfully lobbied Congress to loosen scrutiny on companies like his.
At the time, Greg Becker urged that “tightened prudential standards” should be lifted “given the low risk profile of our business.”
It was also revealed that Becker sold $3.57 million worth of stock in a pre-planned, automated sell-off two weeks before the bank collapsed — and the CFO closed out $575,000 the same day.
Becker sold 12,451 shares on Feb. 27 at an average price of $287.42 each.
Greg Becker, president of the SVB, lobbied Congress in 2015 to reduce oversight of his bank
Greg Becker (left) sold 12,451 shares on Feb. 27 at an average price of $287.42 per share. SVB’s CFO Daniel Beck (right) sold 2,000 shares at $287.59 per share on the same day as his boss. The price fell to just $39.49 in premarket Friday before the Federal Deposit Insurance Corporation (FDIC) seized its assets.
The price plummeted to just $39.49 in premarket on Friday before the Federal Deposit Insurance Corporation (FDIC) seized the bank’s assets. It closed at $15.
Federal records obtained by The Lever showed that Becker spent more than half a million dollars on federal lobbying in 2015-18.
The money was well spent: the SVB got the light regulation it wanted.
Becker told Congress about “SVB’s deep knowledge of the markets it serves, our strong risk management practices.”