Shopify Capital Review

Shopify Capital Review

Shopify Capital is a funding program exclusively for Shopify merchants to have access to business loans or merchant cash advances. Shopify businesses may receive an invitation for funding if they pre-qualify for a loan or a merchant cash advance based on their sales history. Shopify Capital can be attractive to those who qualify, because they can receive cash relatively quickly without going through an application process.

How Do I Qualify for Shopify Capital?


Shopify only allows certain businesses to qualify for Shopify Capital. This includes:

  • Selling on Shopify
  • Operating in the U.S., Canada, or the U.K.
  • Being a low risk profile
  • Having Shopify Payments or a different third-party payment processor
  • Processing a certain sales threshold


Shopify Capital Loans vs. Merchant Cash Advances


Shopify Capital Loans


Shopify offers loans in lump sum amounts along with a borrowing fee that is deposited in your business bank account. Loans can be as high as $1 million under a 12 month term. Unlike a typical loan, Shopify loans don’t have interest rates, but rather they have remittance rates. The remittance rate operates similarly to an interest rate, except that Shopify automatically takes a percentage of your sales until the loan principal plus the borrowing fee is fully repaid. 


Shopify also requires all borrowers to meet certain payment milestones. Because you are required to repay the full amount in 12 months, and is separated into six 60 day payment milestones. If you are unable to repay at the milestone mark, Shopify will debit the amount you owe from your bank account.


One thing that is important to note is that Shopify Capital loans are only available to certain U.S. states including: Arizona, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, North Carolina, South Carolina, Utah, Washington, Wisconsin, and Wyoming. 


Shopify Capital Merchant Cash Advances


Shopify’s merchant cash advances operate very similarly to their business loans. The cash advances come in a lump sum of the principal plus a borrowing fee. Advances can be as low as $200 and as high as $1 million. There is also a remittance rate associated with the merchant cash advance. After you’ve paid 25% of your total to remit, you have the option to pay the remaining balance in a single lump sum.


Unlike Shopify Capital loans, the merchant cash advances are available to Shopify businesses in all U.S. states and Canada that qualify.


How to Get a Loan from Shopify Capital


To receive a loan from Shopify, there is no additional application. Shopify contacts businesses who are qualified to receive funding from Shopify Capital based on the basic parameters mentioned before.


If you are eligible for Shopify Capital, you will be able to see your pre-qualified offers in your Shopify admin dashboard. Generally the offers are valid for 30 days and may be revoked beyond that time frame. If you accept the offer, it will take two to five business days until Shopify fully approves the funding offer. It’s important to note that not all pre-qualified offers are not always guaranteed and can change. Once Shopify approves your funding offer, then the funds will be deposited into your bank account as early as the next business day.


After you’ve received the funding, you are able to track the post-funding process through the Shopify admin dashboard. In there you can view your payment history, your remaining balance, and daily sales revenue. With this, the repayment process outlined by Shopify begins.


Pros

  • You don’t have to apply for Shopify Capital. Shopify will notify you if you qualify for funding.

  • Repaying the loan or merchant cash advance is easy, because it is automatically integrated with your Shopify admin dashboard and bank account.

  • Bad credit isn’t an issue. Since you’re a Shopify business, Shopify already knows your sales history and can give funding based on your business data.

Cons

  • You don’t have to apply for Shopify Capital. Shopify will notify you if you qualify for funding.

  • Repaying the loan or merchant cash advance is easy, because it is automatically integrated with your Shopify admin dashboard and bank account.

  • Bad credit isn’t an issue. Since you’re a Shopify business, Shopify already knows your sales history and can give funding based on your business data.

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