Some Etsy sellers failed to get disbursements on Friday, and in a letter that a seller forwarded to EcommerceBytes, Etsy explained it was due to the Silicon Valley Bank (SVB) debacle.
(See update below.)
Things got rocky for the bank, which lends money to startups and handles banking for tech firms. There was a run on the bank after venture capitalists told their portfolio companies to pull out their cash, and SVB went into FDIC receivership on Friday
Etsy sent the following letter to sellers who were impacted by its issues with the bank:
"We wanted to let you know that there is a delay with your deposit that was scheduled for today. This delay was caused by the recent developments regarding Silicon Valley Bank, who Etsy uses to facilitate disbursement to some sellers. We are working with our other payment partners to issue your deposit as soon as possible.
"We apologize for any inconvenience or disruption this may have caused. We know that you count on us to help run your business and we understand how important it is for you to receive your funds when you need them. Please know that our teams are working hard to resolve this issue and send you your funds as quickly as possible.
"No further action is needed from you at this time. Please feel free to reach out to our Help Center 24/7 with any questions you might have."
However, sellers discussing the issue on the Etsy discussion boards and elsewhere were concerned at the lack of details and some said they were halting activity on the site.
"I will be taking orders through this page only as the bank that is used by Etsy has been seized," one seller posted on Facebook
. "I am out a lot of money as I have sent all orders even though I have not yet been paid out by Etsy, and if this isn't fixed, I will never see that money. If you would like to place an order, message me through here and I will get back with you ASAP!"
EcommerceBytes couldn't find any announcement on Etsy, and we reached out to the company on Friday evening. It had not filed any notice with the SEC as of that time, indicating its exposure could be immaterial. But for sellers facing cashflow issues with bills to pay, today's disbursement delay is material to their businesses.
Sellers will have to wait days to get their disbursements. An Etsy spokesperson provided us with the following statement, which it also posted on its website
"At Etsy, supporting our sellers is our highest priority, and we understand how important it is for these small businesses to be able to receive their funds when they need them. We recently experienced a delay in issuing payments to some sellers related to the unexpected collapse of Silicon Valley Bank. Our teams have been working around the clock to implement a solution, and we expect to pay sellers via our other payment partners within the next several business days."
(Note that's business days.)
: Relief! Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer, per the FDIC website