Running a Shopify store often requires extra cash to cover inventory, ads, and operating costs - especially during peak sales periods like Black Friday. If you're looking for funding, three key options stand out:
- Revenue-Based Financing: Get a lump sum and repay a percentage of your sales, making it flexible for fluctuating revenue. Quick to secure and doesn’t require personal credit checks.
- Shopify Capital: Pre-approved loans available directly in your Shopify dashboard. Repayments are tied to daily sales, making it an easy option for Shopify users.
- Bank or SBA Loans: Offer the lowest interest rates with fixed monthly payments but require strong credit and take longer to process.
Each model has pros and cons based on your cash flow, urgency, and business goals. Below, we break them down further to help you make the best choice.
How to get Revenue-based Financing for your Shopify Store?
1. Revenue-Based Financing (e.g., Onramp Funds)
Revenue-based financing (RBF) offers businesses a lump sum of capital that’s repaid through a fixed percentage of ongoing sales. This model allows you to maintain full ownership of your business since repayments adjust according to your sales performance, and you don’t give up any equity. The repayment continues until you reach a pre-agreed total amount, typically ranging from 1.3x to 1.6x the original funding amount.
Repayment Structure
With RBF, repayments are automated and collected daily or weekly as a percentage of your gross sales processed through platforms like Shopify or other connected payment accounts. For example, if you receive a $50,000 advance with a 1.4x repayment cap and an 8% remit rate, you’ll pay back 8% of your daily revenue until you’ve repaid $70,000. If your store averages $80,000 in monthly sales, your monthly repayment would be about $6,400. The best part? This amount adjusts naturally with your revenue, which helps ease cash flow challenges during slower sales periods.
Eligibility Requirements
RBF providers focus on your business’s sales performance rather than personal credit scores or physical assets. To qualify, you’ll generally need 3–6 months of sales history, minimum revenue of $100,000 annually (or $3,000+ monthly), and a registered business entity like an LLC or corporation. For instance, Onramp Funds evaluates your Shopify store’s real-time performance data, skipping personal credit checks entirely. They also support sellers across platforms such as Shopify, Amazon, BigCommerce, WooCommerce, Walmart Marketplace, and TikTok Shop. This makes RBF a practical option for online-first brands that have steady sales but lack traditional collateral.
Speed of Funding
One of the standout benefits of RBF is how quickly you can access funds. The application process can be completed online in just minutes, with funding decisions made within 24–72 hours once your sales data is connected. Once approved, funds are usually deposited within 1–3 business days - much faster than the weeks it can take to secure a traditional bank loan or SBA funding. For example, Onramp Funds can provide an initial funding estimate in about a minute and deliver funds within 24 hours of final approval. This speed can be a game-changer when you need to act fast on growth opportunities.
Best Use Cases for Shopify Sellers
RBF is an excellent option for short- to medium-term investments that can quickly generate revenue. It’s ideal for funding inventory purchases for proven products, scaling paid advertising campaigns, or launching new product lines on an already successful storefront. This model is especially appealing to sellers with strong sales momentum who want to avoid the personal guarantees often required by traditional banks.
"Onramp offered the perfect solution with revenue-based financing to secure the capital we needed to invest in inventory and pay it back at a reasonable time frame once we made sales. The process was quick, easy, and the support was great." - Jeremy, Founder and Owner of Kindfolk Yoga
This flexible financing option sets itself apart from other models, which we’ll explore further in the next section as we dive into platform-embedded loans offered directly through Shopify.
2. Shopify Capital and Platform-Embedded Loans
Shopify Capital is Shopify's built-in financing program, available directly through your Shopify admin. Eligible merchants in the U.S. receive pre-qualified offers without needing to go through the lengthy traditional loan application process. This program has grown significantly, with $1.8 billion in combined business loans and merchant cash advances issued in the first half of 2025 alone, including $1 billion funded in Q2 2025. Its streamlined system allows for flexible repayment options, which we'll break down below.
Repayment Structure
With Shopify Capital, repayments follow a merchant cash advance model. Instead of fixed monthly payments, a set percentage of your daily sales is deducted until the total repayment amount is met. For instance, if you receive a $50,000 advance with a total repayment of $60,000 and a 10% daily deduction rate, $300 would be deducted daily from a store averaging $3,000 in sales per day. At that rate, the advance would be fully repaid in about 200 days. All loans must be repaid within 18 months, and Shopify sets minimum payment thresholds every six months to ensure consistent progress.
Eligibility Requirements
Shopify Capital operates on an invite-only basis, meaning you'll need to wait for a pre-qualification offer to appear in your Shopify admin. Shopify assesses your store's performance metrics, including sales volume, payment history, and overall risk profile, to determine eligibility. Since decisions are based on your store's data, a hard credit check is usually not required. However, you must use Shopify Payments to process transactions, and the program generally favors stores with a steady and established sales history.
Speed of Funding
One of Shopify Capital's standout features is how quickly funds are made available. Using real-time sales data, Shopify simplifies the underwriting process, enabling funds to be deposited within days after acceptance. This makes it a great option for merchants needing fast access to capital for time-sensitive opportunities.
Best Use Cases for Shopify Sellers
Shopify Capital is ideal for short- to medium-term financial needs where speed and simplicity are key. It works well for buying inventory ahead of peak seasons like Q4 holidays or back-to-school, boosting marketing campaigns with quick returns, or bridging cash-flow gaps caused by payout delays. Its repayment model, which scales with your revenue, offers some flexibility during slower periods. However, it may strain cash flow if your profit margins are tight. For larger, long-term projects or if you operate across multiple platforms outside of Shopify, more traditional term loans or specialized financing options might be better suited to your needs.
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3. Traditional Bank and SBA Term Loans
For Shopify sellers planning long-term investments, traditional loans offer stability with predictable repayment schedules.
Traditional bank term loans and Small Business Administration (SBA) loans operate differently from revenue-based financing. They provide a lump sum upfront, which borrowers repay in fixed monthly installments over a set period. These terms typically range from 3–10 years for working capital loans and up to 25 years for SBA 7(a) loans tied to real estate.
Repayment Structure
With these loans, monthly payments remain fixed, regardless of how sales perform. Lenders often require some form of collateral, such as inventory, equipment, or personal guarantees. SBA loans, in particular, involve the government partially backing the lender’s risk. Missing payments can lead to late fees, defaults, or even the seizure of pledged assets.
Eligibility Requirements
To qualify, banks and SBA lenders expect a proven track record. This includes at least two years of operating history, solid credit scores, and consistent cash flow. Applicants must show profitability - or a clear path to it - and demonstrate their ability to manage debt payments. Required documentation often includes tax returns, financial statements, business plans, and details about collateral. For SBA loans, businesses must also meet specific size standards, operate for profit within the U.S., and prove they cannot secure credit on reasonable terms without the SBA’s backing.
Speed of Funding
Compared to embedded financing options, traditional and SBA loans take longer to process. Steps like prequalification, submitting a full application, underwriting, collateral review, and final approval can stretch the timeline to several days or even weeks. For SBA loans, additional eligibility checks and formal approvals may further delay funding. Sellers planning for seasonal inventory or other time-sensitive needs should start the application process early.
Best Use Cases for Shopify Sellers
These loans are ideal for long-term projects with steady cash flow, such as scaling up inventory, purchasing equipment, opening physical stores, or refinancing higher-interest debt. Their multi-year terms and lower interest rates make them a good fit for investments with extended payback periods, but they’re less suitable for short-term needs or situations requiring flexible repayment plans.
Financing Model Comparison
Comparison of 3 Financing Models for Shopify Sellers
Choosing the right financing model depends on your revenue patterns, credit profile, and how quickly you need funds. Here's a breakdown of how the three primary options compare for U.S. Shopify sellers:
| Factor | Revenue-Based Financing (e.g., Onramp Funds) | Shopify Capital & Platform Loans | Traditional Bank & SBA Term Loans |
|---|---|---|---|
| Repayment Structure | A percentage of sales (usually 1%–25% of monthly revenue); payments adjust with sales until a set total is repaid | A fixed percentage of daily Shopify sales, automatically deducted; repayment capped at 12–18 months, with minimum payment milestones | Fixed monthly payments of principal and interest over a set term (3–10 years, or up to 25 years for SBA real estate loans); payments remain constant, regardless of sales |
| Eligibility | Based on performance metrics like consistent revenue and store data rather than credit scores; typically requires $3,000+ in monthly sales and a short operating history | Invite-only via the Shopify dashboard, determined by sales history and risk metrics; no credit score needed, but Shopify Payments is required | Requires strong credit, at least 2 years in business, solid financials, and collateral or personal guarantees |
| Funding Speed | Funds available in less than 24 hours with minimal paperwork and a quick, data-driven approval process | Typically disbursed within 2–5 business days after approval | Can take weeks to months due to extensive underwriting and documentation requirements |
| Cost of Capital | Higher effective cost through a flat fee or factor rate; repayment accelerates with stronger sales | Moderate to higher costs with a transparent fixed fee; while no traditional APR applies, the implied cost often falls in the mid-to-high range | Lowest interest rates and overall cost of capital, provided the business qualifies, with predictable fixed payments |
| Cash Flow Impact | Payments adjust with sales, easing pressure during slower months | Payments are automatically deducted from daily Shopify payouts, requiring careful cash-flow monitoring | Fixed monthly payments must be made regardless of sales fluctuations, which can strain cash flow during slow periods but aids in long-term budgeting |
| Best Use Cases | Ideal for short- to medium-term needs like inventory purchases ahead of demand spikes, advertising campaigns, or expanding to new marketplaces, where repayment flexibility is key | Best for everyday working capital needs, such as inventory replenishment or Shopify-centric marketing, with seamless platform integration | Suited for large, long-term investments like building warehouses, buying equipment, expanding teams, or refinancing high-cost debt |
For instance, imagine a seller generating $80,000 in monthly revenue who needs $50,000 for Q4 inventory. Revenue-based financing offers flexibility by scaling payments with sales peaks. Shopify Capital provides quick access with daily deductions, while traditional loans offer the lowest rates but take longer to secure.
The best option depends on your priorities - whether that's speed, payment flexibility, or minimizing overall costs.
Conclusion
Selecting the best financing model for your business boils down to three key considerations: your revenue patterns, how quickly you need funds, and your growth goals. For example, revenue-based financing options like Onramp Funds can provide capital in as little as 24 hours. On the other hand, traditional loans may offer lower interest rates but typically require stronger credit and take longer to process. Evaluate these choices carefully, keeping your sales trends and growth objectives in mind.
Don’t wait until you’re facing a cash crunch. Take a close look at your Shopify sales from the past 6–12 months to identify seasonal trends and plan ahead for inventory, marketing, or expansion needs. Run realistic projections to ensure that repayment schedules align with your cash flow. Use this analysis to choose a financing option that supports your growth strategy effectively.
Think of financing as a tool for strategic growth rather than a last-minute solution. Revenue-based financing, for example, allows you to retain equity while aligning repayments with your sales, making it a smart choice for short-term, revenue-focused initiatives. Every financing model has its own set of benefits and trade-offs, so it’s important to choose one that fits your business needs. By doing so, you can seize growth opportunities without waiting for a financial emergency.
FAQs
What are the benefits of revenue-based financing for Shopify sellers?
Revenue-based financing provides Shopify sellers with a funding option that adjusts to their business's performance. Instead of fixed monthly payments like traditional loans, this model ties repayments to a percentage of your revenue.
This setup means payments fluctuate with your sales, offering breathing room during slower periods. It's a practical choice for sellers aiming to invest in areas like inventory, advertising, or other growth initiatives without the stress of strict repayment schedules.
How does Shopify Capital decide if you're eligible for a pre-approved loan?
Shopify Capital offers pre-approved loans by evaluating your store's performance metrics, including sales history and overall business health. These factors help assess your ability to repay the loan using future sales.
If you qualify, Shopify will notify you directly in your admin dashboard, where you can explore the available funding options. The process is simple - repayments are automatically deducted as a percentage of your daily sales, making it hassle-free.
What should I consider when deciding between a traditional bank loan and other financing options?
When deciding between a traditional bank loan and alternative financing, it's crucial to weigh factors like how quickly you can get approved, the flexibility of repayment terms, and eligibility requirements. Traditional bank loans tend to come with stricter qualifications and a slower approval process. On the other hand, alternative financing options - such as revenue-based financing - often provide quicker access to funds, with repayment terms that adjust based on your sales performance.
Think about your specific business needs. Do you need funds urgently to stock up on inventory or launch a marketing campaign? Is your cash flow steady or does it vary month to month? Alternative financing can be a better fit for eCommerce businesses with inconsistent revenue streams, offering solutions that align with their unique challenges. However, always take the time to fully understand the terms and associated fees before making a commitment.
