Running a Shopify store? Need funding to grow or manage cash flow? Here are six financing options tailored to Shopify merchants, covering everything from quick cash advances to long-term loans:
- Shopify Capital: Fast, sales-based funding ($200–$5 million) with flexible repayment tied to daily sales. No credit check required.
- Onramp Funds: Revenue-based financing for eCommerce businesses. Funds in under 24 hours, with repayment linked to sales or fixed payments.
- Merchant Cash Advances: Quick lump sums (up to $500,000), repaid via a percentage of daily revenue. Easier approval than traditional loans.
- Equipment Financing: Loans to purchase essential tools like POS systems or fulfillment equipment. Equipment serves as collateral.
- Business Lines of Credit: Flexible borrowing up to $500,000. Pay interest only on the amount used - great for seasonal needs.
- SBA and Bank Loans: Formal loans with low rates and high limits (up to $5.5 million). Ideal for established businesses but slower to process.
Quick Comparison:
| Financing Option | Funding Speed | Repayment Structure | Typical Amounts | Key Eligibility |
|---|---|---|---|---|
| Shopify Capital | 2–5 days | % of daily sales | $200–$5M | Active Shopify store, sales history |
| Onramp Funds | < 24 hours | % of sales or fixed fee | Tailored to sales | $3,000+ monthly sales |
| Merchant Cash Advances | 24–48 hours | % of sales + fee | $5,000–$500,000 | Monthly revenue, card processing |
| Equipment Financing | 3–7 days | Fixed monthly payments | Up to equipment value | Equipment as collateral |
| Business Lines of Credit | 1–2 weeks | Interest on amount used | $10,000–$500,000 | Strong credit, business history |
| SBA/Bank Loans | 4–12 weeks | Fixed monthly payments | Up to $5.5M | Extensive documentation, credit |
Key Takeaway: Choose based on your needs - fast cash (Shopify Capital, Onramp), equipment upgrades, or long-term growth (SBA loans). Understand repayment terms and eligibility before committing.
Financing options for your Shopify store
1. Shopify Capital
Shopify Capital is Shopify's built-in financing solution tailored for active merchants. It provides two main funding options: merchant cash advances and loans, with amounts ranging from $200 to $5 million, depending on your store's sales history and volume.
Instead of relying on traditional credit checks, Shopify Capital uses machine learning to assess eligibility. By analyzing millions of data points from your store - like sales performance and platform activity - Shopify simplifies the process, eliminating the need for extensive paperwork.
Eligibility Requirements
To qualify, merchants must:
- Be based in Australia, Canada, the United Kingdom, or the United States.
- Have been actively selling on Shopify for at least 90 days with consistent sales.
- Comply with Shopify's Acceptable Use Policy and Terms of Service.
Trusts and Partnerships are not eligible. Importantly, Shopify Capital operates on an invitation-only basis, meaning you must be pre-qualified to access funding.
Once invited, merchants enjoy fast access to funds, making it a convenient option for growing businesses.
Funding Speed
Shopify Capital stands out for its quick funding process. Most requests are reviewed within 1-3 business days, with some approvals completed in as little as two days. Once approved, funds are typically deposited into your account within 2-5 business days.
Alison Ables, the owner of Prelude & Dawn, shared her experience:
"You request the amount, and within days, it's in your account."
Repayment Structure
Repayments are tied to your daily sales, offering flexibility based on your cash flow. Shopify Capital provides two repayment structures:
- Fixed-fee: A set fee applies, regardless of how quickly you repay.
- Monthly-fee: A fixed monthly fee is added to the percentage of daily sales.
For instance, borrowing $100,000 with a 13% fixed fee means you'd pay $13,000, whether you repay in three months or eleven months. With the monthly-fee option, the same loan would incur a $1,400 monthly fee. If repaid in three months, you'd pay $4,200, but if it takes eleven months, you'd pay $15,400.
This flexible structure ensures your payments adjust naturally to your sales performance, easing financial strain during slower periods.
Typical Loan Amounts
Shopify Capital's factor rates range from 1.1 to 1.13, making it a competitive option compared to other merchant cash advances. Loan terms extend up to 18 months, though repayment often happens faster, depending on sales. To encourage timely repayment, Shopify introduced minimum payment thresholds in February 2024:
- 30% of the total loan must be repaid by the 6-month mark.
- 60% of the total loan must be repaid by the 12-month mark.
Once you've repaid 65% of your current loan, you may qualify for additional funding, providing ongoing support as your business grows.
Funding availability varies by region. Loans are offered in Australia and the United States, while merchant cash advances are available in Canada and the United Kingdom. In the U.S., all funding is issued through WebBank.
2. Onramp Funds
If you're looking for financing options beyond Shopify Capital, Onramp Funds might be worth exploring. This service is designed for eCommerce businesses seeking flexible, sales-driven repayment structures.
Onramp Funds provides revenue-based, equity-free financing for businesses operating on platforms like Shopify, Amazon, BigCommerce, and WooCommerce. The key advantage? You keep 100% ownership of your business while gaining access to the funds you need to grow - whether it's for scaling operations, managing cash flow, or boosting inventory and marketing efforts.
Eligibility Requirements
To qualify for Onramp Funds, Shopify merchants need at least 6 months of profitable sales and must connect their store data for evaluation. Unlike programs that require pre-approval or an invitation, Onramp Funds allows eligible businesses to apply directly, making it accessible for merchants across multiple eCommerce platforms.
Funding Speed
Speed is a major selling point for Onramp Funds. Once approved, you can receive funds in less than 24 hours. After completing the process, the money could hit your bank account within hours, though standard ACH processing times may apply.
Adam B. from The Full Spectrum Company shared his experience:
"Onramp's process is very straightforward and easy to navigate. I had funds in my account within a day of final approval."
Repayment Structure
Onramp Funds offers two repayment options to fit your business needs:
- A revenue-based plan that takes as little as 1% of daily sales with no fixed minimums.
- A fixed payment plan with consistent payments over the term.
Both options come with a flat fee, typically ranging from 2–8%, added to the funded amount.
Typical Loan Amounts
Loan amounts are tailored to your business's sales history. Onramp Funds has earned an "Excellent" rating of 4.3 out of 5 on Trustpilot from 199 reviews, with customers applauding its transparent process and clear repayment terms. On average, businesses see their revenue grow by 60% after receiving funding, and 75% of customers return for additional financing.
Marcio Dias Jr, a satisfied customer, shared:
"Their flexible percentage-based paybacks are off the charts and make it all an incredibly smooth experience that feels nothing like the MCAs out there that don't really care about your business."
3. Merchant Cash Advances from Third-Party Providers
Third-party merchant cash advances (MCAs) are another funding option for Shopify merchants seeking quick access to capital. These advances provide a lump sum upfront in exchange for a percentage of future sales, along with a fee. MCAs are particularly useful for businesses with a high volume of card transactions. Since they are unsecured, MCAs can be a practical choice for covering immediate expenses like restocking inventory, purchasing equipment, launching marketing campaigns, or managing cash flow.
Eligibility Requirements
Compared to traditional bank loans, third-party MCAs come with more flexible eligibility criteria. Many providers require businesses to have been operating for at least a year, though some may approve merchants with as little as six months of history. Key requirements include:
- A credit score of around 550 (some accept scores as low as 500).
- A stable monthly revenue stream.
- At least six months of payment processing history with consistent daily transactions.
- Six months of bank statements to demonstrate financial stability.
With an approval rate of about 90%, MCAs are a practical solution for merchants who might not qualify for traditional loans.
Funding Speed
One of the advantages of third-party MCAs is their speed. Most providers can deliver funds within a few business days to a week.
Repayment Structure
Repayment for MCAs is tied directly to daily sales, typically ranging from 5% to 20% of daily revenue. This is done through methods like split withholding or ACH withdrawals. The overall cost is determined by a factor rate, usually between 1.1 and 1.5. For example, if you receive a $10,000 advance with a factor rate of 1.2, you’ll repay $12,000 over a period of 3 to 18 months.
Typical Loan Amounts
The amount you can borrow depends on your business’s monthly revenue and daily card sales.
4. Equipment Financing
Equipment financing is a type of loan designed to help businesses purchase essential equipment. The equipment itself acts as collateral, which often makes this financing option easier to access for merchants.
This financing is particularly useful for Shopify merchants who need items like point-of-sale systems, packaging machinery, computers, office equipment, or even delivery vehicles. It can also be used to lease or maintain existing equipment.
"Equipment loans allow you to access capital up front to purchase equipment or machinery for your business without disrupting your cash flow. Your equipment serves as collateral for the financing you receive." - Credibly
With equipment financing, you can secure the tools you need without depleting your cash reserves. This helps maintain steady cash flow, improves operational efficiency, and supports profitability.
Eligibility Requirements
To qualify for equipment financing, lenders typically evaluate your credit score, business history, and loan specifics. Common requirements include:
- A minimum credit score of 600, though some lenders may accept lower scores.
- At least one year of business operation to demonstrate stability.
- A down payment, often around 20% of the equipment's value.
Having documents like your business license, registration, bank statements, tax returns, and financial records ready can speed up the approval process. These straightforward requirements make equipment financing an appealing choice for merchants looking to invest in critical tools.
Repayment Structure
Equipment financing offers flexible repayment options. Interest rates generally range from 8% to 30%, depending on your credit profile, and most loans cover 80% to 100% of the equipment's cost.
"With equipment financing, business leaders can spread costs over time to match the equipment's benefits." - Mark Bearden, Senior Vice President at First American Equipment Finance
Loan terms can vary, lasting anywhere from a few months to several years. Lease terms may extend to three, seven, or even ten years. Some lenders offer tailored repayment plans, like interest-only periods or quarterly payments, to align with seasonal business cycles.
You’ll typically choose between two options: equipment loans or equipment leases. With a loan, you own the equipment outright once payments are complete. Leasing, on the other hand, often comes with lower upfront costs and may include an option to purchase the equipment at the end of the lease term.
Typical Loan Amounts
Loan amounts are usually tied to the equipment's value, covering 80% to 100% of the purchase price. For Shopify merchants, this could mean a few thousand dollars for computers or tens of thousands for specialized packaging or fulfillment systems.
Before applying, carefully evaluate your equipment needs, its expected lifespan, and whether you prefer to own the equipment outright. Understanding all associated fees, interest rates, and repayment terms ahead of time will help you make the best choice for your business.
sbb-itb-d7b5115
5. Business Lines of Credit
A business line of credit gives you flexible access to funds when you need them. Instead of receiving a lump sum upfront, you can borrow as needed - up to your approved limit - and only pay interest on the amount you use.
"A business line of credit gives your business access to loans, but only charges interest if and when money is borrowed." - Michael Keenan, Shopify
This option is a solid choice for Shopify merchants facing seasonal sales cycles, cash flow challenges, or unexpected expenses. For example, you can use it to stock up before a busy season, cover operating costs during slow months, or handle surprise expenses without throwing off your financial plans. It's especially helpful for businesses with fluctuating income or seasonal demands.
Business lines of credit come in two main types: secured and unsecured. Secured lines require collateral, like inventory or other business assets, while unsecured lines rely on your credit score and financial history. Most of these lines are revolving, meaning you can borrow, repay, and borrow again without reapplying.
Funding Speed
Quick access to funds can make all the difference when opportunities or urgent needs arise. Business lines of credit generally provide faster funding compared to traditional loans. Once approved, you can immediately tap into the funds for pressing expenses. While the initial approval process varies, online lenders often deliver faster decisions than traditional banks, making them a popular choice for time-sensitive needs.
Eligibility Requirements
When applying, lenders will evaluate several factors to determine your eligibility. Traditional lenders often require at least two years of business history, though some online lenders may consider newer businesses.
Here’s what lenders typically look at:
- Credit Scores: Both personal and business credit scores play a major role.
- Revenue: Minimum monthly or annual revenue thresholds must be met.
- Personal Guarantee: Smaller businesses may need to provide one.
- Collateral: Required for secured lines of credit.
Additionally, lenders might request your business plan, financial statements, and loan proposal. For secured lines, you'll need to offer collateral, and certain industries - especially high-risk or heavily regulated ones - may face more challenges in getting approved.
Repayment Structure
Repayment for a business line of credit works differently than a traditional loan. During the draw period, you can borrow multiple times and make minimum monthly interest payments on the amount you've used. You also have the flexibility to pay more than the minimum whenever you can.
Interest rates typically range from 7% to 21%, depending on your creditworthiness and the type of line. Some lenders may require a balloon payment or convert the remaining balance into a standard loan when the draw period ends.
Typical Loan Amounts
Credit limits vary widely and are influenced by your business’s financial health, credit history, and revenue. Smaller businesses might qualify for limits starting at $10,000, while well-established businesses with strong financials could secure credit limits in the six-figure range.
Factors like annual revenue, time in business, and overall financial stability determine the amount you qualify for. Secured lines often offer higher limits since collateral lowers the lender’s risk, while unsecured lines tend to have stricter limits based on credit alone.
6. SBA Loans and Bank Loans
SBA and bank loans provide formal funding options with competitive rates, often backed by government guarantees. SBA loans, managed by the Small Business Administration and its network of approved lenders, are specifically designed to support small businesses. On the other hand, bank loans are issued directly by financial institutions. For established eCommerce businesses, these loans can provide access to significant funding at attractive rates.
"Of the many different kinds of small-business financing available, SBA loans often are among the most favorable in terms of repayment conditions." – Shopify
That said, traditional bank loans can sometimes fall short in accommodating the unique cash flow patterns of eCommerce businesses. High interest rates and rigid repayment schedules can add pressure to a business's finances. Below, we explore loan amounts, eligibility criteria, processing timelines, and repayment structures.
Typical Loan Amounts
SBA loans are known for offering substantial funding. The 7(a) loan program allows businesses to borrow up to $5 million, while the 504 program offers a maximum of $5.5 million. For smaller needs, the Express and Small Loan programs cap at $350,000 each. Although the 7(a) program doesn’t have an official minimum, loans under $30,000 are rarely approved.
Traditional bank loans, in contrast, vary widely in size based on the lender's policies and the financial standing of the business.
Eligibility Requirements
SBA loans have strict eligibility standards set by federal guidelines. To qualify, a business must:
- Operate for profit
- Be located in the United States
- Meet SBA size standards, generally defined as having fewer than 500 employees
Applicants must also demonstrate that they cannot secure funding from other sources and must prove their creditworthiness. Personal guarantees are typically required for anyone owning 20% or more of the business.
"Lenders and loan programs have unique eligibility requirements. In general, eligibility is based on what a business does to receive its income, the character of its ownership, and where the business operates. Normally, businesses must meet SBA size standards, be able to repay, and have a sound business purpose." – U.S. Small Business Administration
For SBA 7(a) small loans, a minimum FICO Small Business Scoring Service (SBSS) score of 155 is often required. Larger 7(a) loans (over $500,000) typically require a 10% equity injection from the owner.
SBA 504 loans come with additional conditions: businesses must have a tangible net worth under $15 million and an average net income of less than $5 million (after taxes) over the previous two years. These loans also require businesses to meet job creation or public policy goals. Tools like the SBA’s online Size Standards Tool can help determine eligibility, and a detailed business plan is critical to show repayment capacity.
Funding Speed
While SBA and bank loans offer attractive terms, the application and approval processes can take time. Extensive documentation, underwriting, and government approvals contribute to the longer timelines. SBA Express loans, which have simpler eligibility requirements, are processed faster than standard 7(a) loans. However, even these expedited loans are slower compared to financing options like revenue-based funding or merchant cash advances.
Traditional bank loans may process slightly faster since they don’t require government involvement. Still, larger loan amounts often come with lengthy underwriting procedures.
Repayment Structure
SBA loans are appealing for their flexible repayment terms. SBA 7(a) loans offer repayment periods of up to 10 years for working capital and equipment, and up to 25 years for real estate purchases. SBA microloans, on the other hand, have shorter repayment terms, typically capped at six years. These extended timelines, combined with lower interest rates, make SBA loans a popular choice for small businesses.
Traditional bank loans vary in repayment structure based on the lender and the loan’s purpose. However, their fixed monthly payments can sometimes put a strain on cash flow.
Key Features Comparison
When it comes to financing, the best choice depends on your specific needs, how quickly you need funds, and your financial situation. Each option has its own perks and trade-offs, influencing factors like cash flow and growth potential.
One major difference across financing options is funding speed. For instance, Onramp Funds can approve qualified applicants within just 24 hours, while Shopify Capital may take up to a week for application review, followed by another 24–48 hours to disburse funds. Merchant cash advances from third-party providers are also quick, typically funding within 24–48 hours, making them appealing for time-sensitive needs. On the other hand, equipment financing and business lines of credit take anywhere from a few days to two weeks. The slowest option is SBA or bank loans, which can require several weeks - or even months - because of lengthy documentation and underwriting processes.
Repayment structures also differ. Revenue-based options like Onramp Funds and Shopify Capital use a fixed percentage of daily sales for repayments, meaning payments adjust based on your revenue. Similarly, merchant cash advances are repaid as a percentage of sales but include an additional fee. In contrast, traditional options like SBA loans involve fixed monthly payments, while business lines of credit offer flexibility - you only pay interest on the funds you actually use. The table below breaks down these features:
| Financing Option | Funding Speed | Repayment Structure | Typical Amounts | Key Eligibility |
|---|---|---|---|---|
| Shopify Capital | Up to 1 week + 24–48 hours | Fixed % of daily sales | Varies by performance; term loans start at $1,000,000 | Active Shopify store, sales history, compliance with TOS |
| Onramp Funds | Within 24 hours | Revenue-based (% of sales) | Tailored to business performance | eCommerce merchants with $3,000+ monthly sales |
| Merchant Cash Advances | 24–48 hours | Percentage of sales + fee | $5,000–$500,000 | Minimum monthly revenue, credit card processing history |
| Equipment Financing | 3–7 days | Fixed monthly payments | Up to 100% of equipment value | Equipment as collateral, business credit score |
| Business Lines of Credit | 1–2 weeks | Interest on amount used | $10,000–$500,000 | Strong credit score, established business history |
| SBA/Bank Loans | 4–12 weeks | Fixed monthly payments | High funding limits | Extensive documentation, personal guarantees, credit requirements |
Shopify Capital stands out for its invitation-only process, which is based on store performance and compliance with Shopify's policies. Interestingly, Shopify Capital doesn’t require personal credit checks or report to credit bureaus. In contrast, Onramp Funds allows direct applications from qualified businesses, skipping the need for an invitation. Meanwhile, SBA loans come with the most stringent requirements, including personal guarantees, detailed business plans, and proof that other funding options have been exhausted.
Shopify Capital ties its funding amounts to your sales performance and business metrics, with term loans starting at $1,000,000 (or $2,500,000 in New York). Similarly, Onramp Funds customizes funding amounts based on your sales history and business needs.
Conclusion
Picking the best financing option for your Shopify store depends on your unique situation. Factors like your sales history, growth ambitions, and immediate cash flow requirements should shape your decision. Each financing route serves a specific purpose - whether it's Shopify Capital's sales-based repayment model or Onramp Funds' straightforward application process for eligible merchants.
The numbers tell an important story. In July 2023, large banks approved just 13.3% of small business loan applications, while smaller banks approved 18.9%. This low approval rate highlights why many business owners turn to alternative financing options.
When deciding, think about how much money you need, how quickly you need it, and how the repayment terms fit with your cash flow. Revenue-based options like Onramp Funds and Shopify Capital adjust payments based on your sales, which can ease the burden during slower months. On the other hand, traditional loans offer fixed monthly payments but often require stronger credit scores and more paperwork.
Before committing, take a close look at the terms. Understanding repayment schedules, fees, and default conditions can save you from potential headaches later. For instance, Shopify Capital requires that you repay at least 30% of the loan within six months and 60% by the 12-month mark.
Improving your credit and refining your business plan can also make a big difference in securing better financing terms. Comparing multiple options is essential to finding the one that aligns with your business goals.
Timing matters, too. Fast-approval options can be a lifesaver for seasonal or urgent funding needs. The key is to align the financing timeline with your business requirements while ensuring the repayment terms support your long-term growth.
FAQs
What do I need to qualify for Shopify Capital, and how does the invitation process work?
To be eligible for Shopify Capital, you need to meet a few key criteria: your Shopify store must have been active for at least 90 days, you should maintain a consistent sales record, and your business must be based in the United States, Canada, or the United Kingdom. Shopify assesses your store's activity and sales performance to decide if you qualify.
The program operates on an invitation-only basis. If you're eligible, you'll receive an offer directly in your Shopify admin or through email. There’s no need to fill out a formal application. Once you accept the offer, the approval process usually takes just 1–3 business days, giving you fast access to the funds you need to grow your business.
What are the repayment options for Shopify financing, and how do I choose the right one?
Repayment options for Shopify financing generally come in three forms: fixed monthly payments, revenue-based deductions, and percentage-of-sales models. For instance, Shopify Capital allows you to repay either through fixed monthly installments or by deducting a percentage of your daily sales.
When deciding which option works best, take a close look at your business's cash flow. Revenue-based models adjust repayments according to your sales, making them more flexible during slower periods. On the other hand, fixed payments give you predictable costs every month. Be sure to also assess the total repayment amount and how it might affect your ability to reinvest in your business. Matching the repayment structure to your sales trends can make managing your finances and planning for growth much easier.
What are the benefits of using revenue-based financing like Onramp Funds instead of traditional bank loans for eCommerce businesses?
Revenue-based financing, like the options provided by Onramp Funds, offers eCommerce businesses quicker and more adaptable access to funding compared to traditional bank loans. Instead of relying heavily on credit scores, approval is typically determined by your sales performance, making it an appealing choice for online sellers.
What makes this approach stand out is how repayments work. Since payments are tied to your revenue, they adjust based on how well your business is doing. This setup eases financial stress during slower seasons and keeps repayments aligned with your cash flow. Without fixed monthly payments, you can channel your energy and resources into growing your business - whether that means stocking up on inventory, ramping up marketing efforts, or pursuing other opportunities to scale - all without the rigid structure of conventional loans.
