Shopify Capital provides funding to Shopify store owners in the U.S., Canada, the U.K., and Australia to help grow their businesses. Here's what you need to know:
- Eligibility: Your store must have been active for at least 3 months, use Shopify Payments or approved third-party providers, and meet performance metrics like consistent sales and low chargebacks.
- Funding Options: Choose between monthly-fee loans (flexible repayment terms) or fixed-fee loans (predictable costs). Loan amounts range from $200 to $5 million.
- Repayment Terms: Payments are tied to daily sales, with milestones requiring 30% repayment in 6 months and 60% in 12 months.
- Application Process: Apply through your Shopify admin under Finance > Capital. Funds are typically available within 1–3 business days after approval.
Key Benefits: No credit checks, quick access to funds, and flexible repayment tied to sales. However, repayment can strain cash flow during slow sales periods, and eligibility is limited to established stores.
Shopify Capital is a fast funding option for businesses with strong sales performance. Make sure your revenue can support repayment milestones before applying.
Shopify Capital Qualification Requirements
Basic Requirements
To be eligible for Shopify Capital funding, your store must be located in the United States, Canada, Australia, or the United Kingdom. For merchants in the U.S., your store must also use USD as its currency.
Your store needs to show operational stability by meeting these criteria:
- Keeping an active Shopify subscription
- Running for at least three months or having made your first sale more than three months ago
- Using Shopify Payments or approved third-party payment providers to process transactions
Stores operating as trusts or partnerships are not eligible.
Store Performance Metrics
Shopify also assesses your store's performance to determine eligibility. They focus on several key areas:
| Performance Category | Key Evaluation Factors |
|---|---|
| Sales Performance | Revenue patterns and consistency |
| Customer Interaction | Return rates, disputes, and chargeback history |
| Platform Engagement | Use of Shopify tools and features |
| Payment History | Reliable payments and consistent payouts |
| Compliance | Following Shopify's Terms of Service |
Eligibility is automatically calculated and can change based on how your store performs over time. Receiving a funding offer doesn’t guarantee approval - you’ll still need to complete the application process. For U.S.-based merchants, all funding is issued through WebBank in partnership with Shopify Capital.
Shopify Capital Explained: Is it Right for Your Business? 🟢 Tutorial for Beginners
How to Apply and Get Funded
If you meet the qualification criteria, here’s how you can apply for and secure Shopify Capital funding.
Application Steps
You can apply for Shopify Capital directly from your Shopify admin.
To view funding offers, go to Finance > Capital in the Accounts section. Shopify typically offers two funding options: monthly-fee loans and fixed-fee loans, each with specific terms and details.
| Application Phase | Key Actions Required |
|---|---|
| Initial Review | Check funding offers in Finance > Capital |
| Offer Selection | Choose between monthly-fee or fixed-fee loan options |
| Documentation | Review the Loan Agreement and Disclosures |
| Identity Verification | Verify details of the business owner and ownership |
| Payment Setup | Confirm or switch to Shopify Payments if necessary |
"Funding isn't guaranteed, and an offer to apply might expire without notice, or the funding amount might change." - Shopify Capital Documentation
You can select a preset or custom loan amount within your approved range. Once submitted, the loan amount cannot be changed. Make sure to review all U.S.-specific terms and disclosures before completing your application.
Funding Timeline
Shopify Capital typically processes applications within 1–3 business days. During this time, the pre-qualified amount may be adjusted.
Here’s a real-world example: In March 2023, a U.S.-based Shopify merchant applied for a $50,000 loan. Their application was processed in two business days, and the funds were deposited directly into their business bank account. Daily repayments, based on a percentage of daily sales, started two business days later.
To ensure a smooth process:
- Keep your business documentation up to date.
- Check your Shopify admin regularly for updates or additional requests.
- Verify that your business bank account information is accurate.
- Be ready for daily repayments to start soon after receiving the funds.
sbb-itb-d7b5115
Funding Options and Payment Terms
Available Funding
Shopify Capital provides two straightforward funding models after you complete the application process. The amount you’re eligible for is determined by your store’s sales history and risk profile. Here’s a breakdown of the two loan options:
| Loan Type | Key Features | Best For |
|---|---|---|
| Monthly-fee Loan | • Fixed monthly fee that changes with repayment duration • Allows for early repayment |
Businesses anticipating fast sales growth |
| Fixed-fee Loan | • One-time fee (factor rate) remains unchanged • Offers predictable total payment costs |
Businesses preferring fixed, long-term costs |
For example, if you borrow $100,000 under the monthly-fee model, fees could range from $4,200 for a 3-month term to $15,400 for an 11-month term. With the fixed-fee model, the fee is set at 13%, meaning you’ll pay $13,000 no matter the repayment period.
Payment Terms
Repayments are linked to your daily sales, making them flexible and manageable. Here’s how it works:
- Daily Repayment: A set percentage of your daily sales is automatically deducted.
- Maximum Term: The total amount must be repaid within 18 months.
- Minimum Repayment Milestones: At least 30% must be repaid by 6 months, and 60% by 12 months.
- No Sales, No Payment: On days with no sales, no repayment is required.
- Manual Payment Option: You can make additional payments of $1 or more at any time.
Repayments are automatically adjusted based on your daily performance, ensuring they stay aligned with your business activity. This system provides flexibility while keeping you on track toward completing repayment.
Pros and Cons
Key Benefits
Shopify Capital comes with several advantages that make it appealing for eligible store owners. Here's a quick breakdown:
| Benefit | Description | Impact |
|---|---|---|
| Quick Access | Funds can be available within 2 business days after approval | Provides fast access to needed capital |
| Zero Credit Impact | No credit checks or effect on your personal credit score | Keeps your personal credit intact |
| Flexible Payments | Repayments are automatically deducted as a percentage of daily sales | Helps manage cash flow effectively |
| Protected Assets | No personal liability or collateral is required | Reduces personal financial risk |
| Integrated Solution | Fully integrated within the Shopify platform | Simplifies financial management |
Common Challenges
Despite its benefits, Shopify Capital also has some limitations you should keep in mind:
Eligibility Restrictions
- Only available to merchants in certain countries.
- Requires an established sales history on Shopify, limiting access for newer stores.
Financial Considerations
- Factor rates, typically between 1.1 and 1.13, can lead to higher overall costs compared to traditional loans.
- Daily sales-based repayment can become a burden during slower sales periods, potentially impacting cash flow.
Weigh these factors carefully to decide if Shopify Capital aligns with your business needs.
Making Your Decision
When deciding if Shopify Capital suits your business, it's important to weigh key factors alongside the funding options and repayment terms we’ve already covered. These considerations can help you determine whether it aligns with your current business situation.
| Business Scenario | Is Shopify Capital a Good Fit? | Key Considerations |
|---|---|---|
| High Daily Sales | Proceed with Caution | Factor rates can lead to higher repayment costs due to faster payback |
| Declining Revenue | Not Recommended | Percentage-based repayments and milestone requirements may be challenging |
| Established Store | Potentially Good Fit | Requires at least 3 months of operation with strong performance metrics |
| Need Quick Funding | Good Fit | Funds available within 2 business days after approval |
These scenarios highlight the funding process and performance requirements we’ve discussed. Keep in mind that cash flow is critical - 82% of business failures are linked to cash flow problems. Evaluate how Shopify Capital’s daily repayment deductions might impact your financial stability.
Financial Details to Consider:
Shopify Capital offers funding amounts ranging from $200 to $5 million. The repayment structure includes:
- 30% repayment within 6 months
- 60% repayment within 12 months
Since Shopify Capital doesn’t allow you to negotiate terms, it’s essential to fully understand the agreement before moving forward. Make sure your revenue can support these payment thresholds while also allowing for growth opportunities in your business.
FAQs
What factors does Shopify evaluate to determine eligibility for Shopify Capital?
Shopify evaluates several key factors to determine if a business qualifies for Shopify Capital. These include your sales history, consistent use of Shopify Payments, the overall health of your account, and your business location.
Meeting these criteria doesn’t guarantee approval, as eligibility is based on Shopify’s internal assessment. However, maintaining strong sales performance and a healthy account can improve your chances of qualifying.
How does Shopify Capital's repayment process affect cash flow during slow sales periods?
Shopify Capital repayments are based on a percentage of your daily sales, which means the amount you remit adjusts with your revenue. On days with low or no sales, your repayment amount will be smaller or even paused. However, Shopify Capital loans come with a maximum repayment term of 18 months, and minimum payments must be met at the 6-month and 12-month marks. If your sales are consistently slow, you may need to make manual payments to meet these requirements and avoid defaulting on the loan.
This flexible repayment model can ease cash flow pressure during slower periods, but it’s important to plan ahead to ensure you can meet the required milestones while managing your business finances effectively.
How can I increase my chances of qualifying for Shopify Capital if my application is denied?
If your Shopify Capital application isn’t approved, don’t worry - eligibility is reassessed periodically. To improve your chances, focus on increasing your store’s revenue, maintaining consistent sales performance, and keeping your Shopify account in good standing.
Shopify evaluates factors like sales trends and overall business health, so demonstrating steady growth and reliability can enhance your eligibility over time. You may also want to review your store’s analytics to identify areas for improvement, such as marketing efforts or product offerings, to boost performance and appeal.
