Silicon Valley Bank Collapse: Etsy Delays Some Seller Payouts After Startup Financer's Crash

Etsy is delaying the payouts of some of its sellers, as the e-commerce marketplace uses the collapsed Silicon Valley Bank as one of its payment partners. The advisory has since caused concerns regarding the future of their Etsy stores.

Etsy started notifying affected sellers about the delay in payouts as early as March 10, The Verge reported Sunday. "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," a spokesperson for Etsy told the outlet.

The spokesperson said the e-commerce platform was expecting to pay its sellers through its other payment partners "within the next several business days" and that some of the delayed payments should start being processed Monday.

Several Etsy sellers have expressed frustration over the delay in payouts.

Twitter user and Etsy seller @maridahdotcom said sellers who have their deposits "set to pay out daily" may not get their deposits on time due to the SVB crash.

One user said he would not get the Etsy payout he needed for the weekend, as his account was among those Etsy linked to SVB for processing payments.

"This is how the crash starts," another user said of the Etsy payout delays.

Gee, owner of Etsy store Cultivated Laser, told The Verge that the delay "came at the most inopportune time for our business: right after a large inventory purchase and right before a move across the country."

Alison Ugur, owner of Etsy shop HookN20, said she has not yet received communication from the platform. "There is no Etsy site update or alert, no communication," she shared, according to the outlet. "It feels not great."

The outlet noted that it appears only sellers who were supposed to get their payouts Friday have received a notification from Etsy. It is unclear how the SVB collapse will affect other sellers who have set up their payments after Friday and are waiting for an update from the e-commerce marketplace.

Another Etsy seller, Owen McKinney, told NBC News that the delay would have a "catastrophic" impact on his business, as the platform has not yet provided a specific timeframe as to when the deposits would be processed.

Nina Bissett, whose Etsy business has been her main source of income since being laid off, said her customers were still expecting their orders. As one of the sellers who got the email about delayed deposits, she would not have the funds needed to ship orders.

The Silicon Valley Bank, which played a major role in financing startups, collapsed Friday morning and was taken over by federal regulators.

A day earlier, SVB stocks plummeted, pulling the shares of other banks down. The bank announced mid-week that it had sold securities at a loss and would also sell more than $2 billion in new shares to help with its balance sheet.

Trading in SVB shares stopped Friday morning, and the bank did not raise capital or find a buyer so California regulators shut the bank down and placed it under receivership.

Sources with knowledge of the matter said the SVB's appointed receiver, the Federal Deposit Insurance Corporation (FDIC), had been trying to find another bank over the weekend that was willing to undergo a merger with the fallen bank.

California Gov. Gavin Newsom also said the government was working with the FDIC "to stabilize the situation as quickly as possible."

Silicon Valley Bank's collapse is deemed by many as the second-biggest bank failure in U.S. history after the 2008 financial crisis when loan association Washington Mutual crashed.