Shopify Capital Business Loans Review

Pros

• No credit score requirements
• Easy application and speedy funding
• Direct repayments from sales

Cons

• Available only to Shopify users
• Requires daily repayments as a percentage of sales
• Not easy to directly apply

What Is Shopify Capital?

Shopify Capital is a merchant cash advance and loan program that offers funding to eligible businesses selling on the Shopify eCommerce platform. All products are issued through WebBank in the US.

Shopify Capital promises to connect Shopify sellers with fast and easy alternative small business loans. Can Shopify Capital deliver? How much will it cost to access a small business loan through Shopify Capital?

And how does Shopify Capital stack up against the best small business loans?

Services Offered By Shopify Capital

Shopify Capital offers short-term business funding in the form of merchant cash advances and short-term loans. Depending on the offer available to your store, loans may use either a fixed-fee structure or a monthly-fee structure. In most cases, repayment is collected automatically as a percentage of your daily sales.

Previously, Shopify also offered revolving lines of credit. As of the time of this update, this product has been discontinued. Shopify Capital flex accounts that offer continuous funding are available to select Shopify Capital users in the United States.

How Shopify Capital Loans & Merchant Cash Advances Work

When you accept funding from Shopify Capital, Shopify buys a percentage of your future sales for a lump sum.

You will repay the amount of your advance or loan plus a fixed amount fee.

Shopify will collect a percentage of sales each business day by holding back a portion of your credit and debit card sales. Shopify calls this the remittance rate, and Shopify examples often use a 10% rate, though the actual rate varies by offer.

Because repayment is based on a percentage of daily sales, the exact repayment timeline can vary. However, Shopify loans must generally be repaid within a maximum repayment period set in your loan agreement.

You can make a lump sum payment to pay off your loan or advance, but your remittance rate will not change.

Shopify Capital Borrower Qualifications

Because Shopify already has access to information about its users’ business and revenue, applying for funding may be quicker and easier than with other financing options available to you. This can take a lot of the guesswork out of knowing whether you qualify for a loan.

Shopify is, at least on paper, quite lenient in terms of minimum time in business, credit score, and business revenue requirements.

Although you can request funding from Shopify Capital, be aware that Shopify will be monitoring your account and will alert you if you become eligible. If you haven’t received an offer yet, that probably means you are not eligible.

Shopify funding is available in Australia, Canada, France, Germany, Ireland, the Netherlands, Spain, the United Kingdom, and the United States.

Shopify does not publicly disclose specific eligibility thresholds. Instead, funding offers are generated automatically based on factors such as store performance, sales history, and account activity.

To be eligible for funding, however, you’ll need to:

• Have a profile that is considered low-risk
• Comply with Shopify’s acceptable use policy and terms of service
• Demonstrate consistent sales
• Have Shopify Payments or another third-party payment provider enabled

Note: If you use Shopify Payments when you receive funding from Shopify Capital, you cannot deactivate Shopify Payments until you’ve fully repaid the amount you owe.

Only store owners are eligible to apply.

Shopify Capital Terms & Fees

Shopify Capital evaluates your creditworthiness based on the status and success of your Shopify store. There is no minimum credit score requirement. Shopify Capital’s rates are, reportedly, quite reasonable, but it would be better if they were disclosed publicly. Just as importantly, you won’t be stuck with additional account fees beyond what you’re already paying for your Shopify account.

Repayment terms are on the short side, so make sure you’re prepared to rapidly repay what you borrow.

These are the terms and fees for Shopify Capital’s lending products.

Shopify Capital does not charge interest rates. Instead, your borrowing fee is calculated using a factor rate.

Here’s how that works: Shopify calculates a fee based on your borrowing amount, which determines how much you have to repay. To come up with the repayment, Shopify will multiply the amount you’re borrowing by a factor rate.

The company no longer publicly discloses the factor rate outside the application process. In the past, it has been between 1.11 and 1.13.

Repaying Shopify Capital Loans & Cash Advances

Instead of paying a fixed sum each day or month, Shopify collects a percentage of your revenue each day. Typically, this is called a “withholding rate,” but Shopify calls it a “remittance rate.”

Because the amount collected fluctuates with your cash flow, you will not have a set repayment date. Instead, Shopify simply keeps withholding its daily cut until the total repayment amount (loan or advance total + fees) has been collected. However, your loan must generally be repaid within the maximum repayment period specified in your loan agreement, which is often up to 18 months.

It’s important to understand that this repayment rate stays at a fixed percentage regardless of how your sales go up or down. On a slow day with $100 in sales, you would repay $10. On a high-volume day with $10,000 in sales, you would repay $1,000.

Repaying Shopify Term Loans

Shopify loans are typically repaid automatically through a percentage of daily sales. The exact repayment structure depends on the loan offer available to your store. Payments are automatically debited from your connected bank account.

Shopify Capital Application Process

In general, you don’t directly apply for Shopify Capital — the company monitors your account and sends an alert by email and in-app when it thinks you’re eligible. Advertising for Shopify Capital instructs store owners to log in to see what offers are available for them.

Most users will be able to choose from a few different offers that vary by borrowing amount, remittance rate, or other elements.

An alert doesn’t guarantee funding, however.

After you choose the offer best suited for your business, Shopify’s underwriters will look at your account. The underwriters may find that you are, in fact, not eligible for the offers presented to you (in which case, they may provide alternative offers) or that you are not eligible for funding at all. You may also have to provide additional information for verification purposes.

If you accept the offer presented to you after underwriting, the money will be sent to your bank account. Shopify says you can receive the funds within as little as two days. If you switch your payment provider to Shopify Payments at the same time, however, approval might take a little longer.

Shopify Capital’s application process is mostly passive, but not exactly transparent, which can lead to some confusion. Time to funding is quick, though not notably so.

Shopify Capital Sales & Advertising Transparency

Most of the information you need to know about Shopify Capital is there, but you’ll have to work a little harder to find it. Some information is available only when you view your lending offers.

Although the wording can be a little confusing, you should be able to get a basic idea of what to expect before getting too involved in the process.

Expect to click through some FAQs or use the chatbot to find what you’re looking for. You’ll find some lending examples with repayment rates illustrated to give you some clarity.

The main issue prospective borrowers may have here is that qualifying is largely a passive experience, the workings of which are mostly invisible to them. Shopify will use an undisclosed formula to decide whether or not you qualify for funding and for how much. There’s not much you can do other than accept or decline what’s offered to you, which makes the advertising of the products seem somewhat superfluous beyond telling you that they exist.

Shopify Capital Customer Service & Technical Support

Shopify’s customer service is either exemplary or unhelpful, depending on whom you ask. From my own experience, I have received informed, helpful answers with minimal wait time. I’ve also done well navigating the help center and using the chatbot to find the information I need. Your experience may be different.

What’s indisputable is that Shopify offers a lot of options. Shopify provides 24/7 support through live chat. Phone and email support may be available depending on your Shopify plan.

You may also be able to find an answer to your problem on Shopify’s help center and in the community forum.

Shopify Capital User Reviews

It’s hard to find customer reviews for Shopify Capital as a distinct entity from the broader Shopify platform. Some people have expressed their hesitation about this funding, but reactions from customers who have used Shopify Capital are relatively scarce.

As is usually the case for big companies that dabble in loans, it’s not easy to separate the capital reviews from those of the broader service.

During our last review update, Shopify had an A+ rating with the Better Business Bureau. That rating has now dropped to an F, primarily because the company has not responded to hundreds of complaints. However, most complaints are about other Shopify products and not Shopify Capital specifically.

Filtering out the signal from the noise, we found Shopify Capital to get mixed reviews from users.

Negative Shopify Capital Reviews & Complaints

A few criticisms did emerge from the general Shopify comments users post online. I spotted some funding-specific complaints in the Shopify user forum and other online forums. Here’s a sampling:

• Expensive Lending: While Shopify Capital rates are pretty good within their class, they can be expensive relative to a bank loan.
• Improperly Frozen Accounts: Some users say they’ve inadvertently run afoul of some Shopify rules that caused the platform to lock them out of their accounts.
• Passive Application: You can’t apply for Shopify Capital when you need a loan; Shopify Capital solicits you when Shopify feels you’re qualified for financing. Even worse, offers made to you may be rescinded or reduced after underwriting gets involved. And several users on the Shopify forum complain that they aren’t receiving additional loan offers even after repaying their original loans.
• Confusing Rates: Because Shopify uses factor rates instead of advertising an interest rate, it’s difficult to understand the cost of borrowing. To ensure you fully understand the cost of Shopify funding, look into cash advance APRs before accepting funds.

Positive Shopify Capital Reviews & Testimonials

Again, independent customer reviews that focus exclusively on Shopify Capital are scarce. I found some discussion in several Reddit forums and saw many positive comments.

In general, here are some things people say they like about Shopify Capital:

• Easy Repayment: Having Shopify take repayments off the top of your sales makes it easy to repay your funding at a steady pace.
• Simple Application Process: Shopify already has most of the information it needs.
• No Hidden Fees: Once you’re offered credit, you will see the fees upfront, so you can decide if it’s worth it to you.
• Fast Funding When You Need It: Despite some drawbacks, Shopify Capital can provide much-needed funds in a pinch. And once you’re approved, you’ll have access to the money within a couple of days.

Notably, many of the positive comments also included acknowledgment of certain known drawbacks, especially the high cost of borrowing via Shopify Capital when compared to traditional lending.

Is Shopify Capital Worth It?

Shopify Capital is certainly worth considering if you are given an offer. It’s fast funding that can help you out of a rough patch.

Some people express concern that Shopify offers expensive financing through Shopify Capital. Overall, compared to some of the best business lines of credit, we feel that Shopify Capital has a lower cost of borrowing than some other offers and easier qualifications, too.

However, if you’re looking for a less expensive short-term business loan, Shopify Capital won’t be your best option. Although the application and funding processes are slower than with Shopify Capital, take a look at SBA loans from the Small Business Association and you’ll find much lower interest rates.

It’s true that reasonably creditworthy merchants may be able to find less expensive financing elsewhere. However, thanks to a simple application process and automatic daily withdrawals that fluctuate with your cash flow, Shopify merchants will have a difficult time finding a more convenient borrowing solution.

The Merchant Maverick Seal of Approval 🏆

Shopify Capital	Apply Now

After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Shopify Capital for yourself.

The Merchant Maverick Seal of Approval 🏆

Shopify Capital	Apply Now

After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Shopify Capital for yourself.