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 became the biggest bank to fail since the 2008 financial crisis on Friday, leaving investors scrambling to recover their funds.
But the crash didn’t just affect wealthy tech entrepreneurs, with a wave of small business owners also caught in the crossfire.
Dozens of business moms were shocked to find out they weren’t getting paid yesterday after The Etsy marketplace announced that it was unable to process some sales payments because it uses Silicon Valley Bank to distribute funds.
Irate sellers took to social media to complain, with a panicked mother of three saying she needs “those funds to feed my family and pay my bills.” Another revealed that she would not be able to pay her mortgage next week if the problem was not resolved quickly.
A small business owner said she couldn’t pay her mortgage in a few days because of her payments being frozen.
“I’ve been an Etsy shop owner since 2015, I’m doing really well on Etsy,” the woman said on TikTok.
‘I noticed today that my money that was supposed to be deposited to be available tomorrow was never sent to my checking account.
‘Then I get an email saying that due to Silicon Valley Bank they can’t issue my deposit. My money, which I worked hard for, cannot be sent to my bank account.
‘The money I expected to have tomorrow in my bank account cannot be sent to me. Why is that my problem?
He added: ‘I have to pay my mortgage in a few days and I can’t because they have my money on hold.’
Businesswoman Amber, who runs personalized gift company Little Miss Lovely Creations, said she was “blown nuts” by the news.
“I’m a mother of three, I have a small business, I do this from home,” she said in a TikTok video.
‘Those funds feed my family and pay my bills.’
She added: “Let’s cross our fingers that we receive our funds on Monday.”
Panic hit the financial sector yesterday after the collapse of SVB.
It means that anyone with deposits of more than a quarter of a million dollars at Silicon Valley Bank now faces losing all their money above the $250,000 protected by federal law.
Dozens of customers were filmed lining up outside a branch to withdraw the cash they had before the fallout.
Meanwhile, police were called to the bank’s headquarters after a group of disgruntled tech founders turned up on the doorstep.
On Friday, Etsy was forced to email its sellers to let them know that payments would be frozen because they were relying on the bank for some of their accounts.
“We wanted to let you know that there is a delay with your deposit that was scheduled for today,” an email to sellers read.
Ohio businesswoman Amanda Nielson told WhatsNew2Day.com she could be forced to close her Etsy account, where most of her sales come from, if the issue isn’t resolved quickly.
Nielson runs the business with her husband Sean, 54. She said hearing the news on a Friday night made her feel “helpless” because there’s nothing she can do over the weekend.
‘This delay was caused by recent events involving Silicon Valley Bank, which uses Etsy to facilitate payouts for some sellers.
“We are working with our other payment partners to issue your deposit as soon as possible.”
Etsy’s stock price was at $105.98 yesterday, after falling 12.52 percent in the past week.
Amanda Nielson, a 45-year-old Ohio native who runs her Flower and Earth soap shop primarily through Etsy, said she was particularly frustrated that the email came on a Friday night.
“It’s the worst time to get that kind of email because you can’t do anything for two days. You feel powerless,’ he told her to WhatsNew2Day.com
“I’m still getting orders now and I don’t know when they’re going to be paid for.”
Nielson runs the business with her husband Sean, 54.
He said they can survive in the short term without the funds, but he is worried that he will have to close his shop.
“Virtually all of my sales are through Etsy. I have another site, but I had been thinking about deleting it because almost everything comes through Etsy,” she said.
“If this is not resolved soon, I will have to close my Etsy account because I can’t afford to take the risk of processing orders without knowing when I’ll get paid.”
WhatsNew2Day.com has contacted Etsy for comment.
It comes after news broke that the embattled bank’s chief executive appeared before Congress in 2015 to argue that it should not be subject to scrutiny.
Greg Becker insisted at the time that ‘enhanced prudential standards’ should be lifted ‘given the low risk profile of our activities’.
Becker successfully convinced Congress to lessen scrutiny of companies like his.
It also emerged that Becker had sold $3.57 million worth of shares in a pre-planned automatic liquidation two weeks before the bank collapsed, with the CFO dumping $575,000 the same day.
Becker sold 12,451 shares at an average price of $287.42 each on February 27.
Greg Becker, the chairman of SVB, lobbied Congress in 2015 to lessen supervision of his bank.
Greg Becker (left) sold 12,451 shares at an average price of $287.42 each on February 27. SVB CFO Daniel Beck (right) sold 2,000 shares at $287.59 each on the same day as his boss. The price plunged to just $39.49 before trading on Friday before the Federal Deposit Insurance Corporation (FDIC) seized its assets.
The price plunged to just $39.49 before trading on Friday before the FDIC seized the bank’s assets. It closed at $15.
Federal records obtained by The Lever showed Becker had spent more than half a million dollars on federal lobbying between 2015 and 2018.
The money was well spent: SVB got the light regulation it wanted.
Becker told Congress about “SVB’s deep understanding of the markets it serves, our strong risk management practices.”