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Shopify Funding Overview

Up to $2,000,000 of Funding For Your Shopify Store.

100% TRANSPARENT FUNDING UP TO $2,000,000

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E-commerce has allowed several small-time entrepreneurs to experience commercial success by expanding their market reach and accessibility to vast customer pools. Among these platforms, Shopify has been a significant player by enabling millions of business owners to set up their online businesses. In addition to these services, Shopify also provides financial assistance and loans to eligible entrepreneurs to promote their growth while generating revenue on the online marketplace.

Shopify funding plans and financing solutions allow entrepreneurs to take their operations to the next level. Businesses, whether online or offline, require a steady flow of finances to meet day-to-day requirements and overall growth prospects. While Shopify funding and its capital solutions have made a mark in the industry, there are several aspects to their financing models which business owners must be aware of.

Explaining Shopify Capital Funding

Shopify funding has two different financing solutions. Both of these options are short-term and encompass business loans and merchant cash advances. Despite the similarities in the funding involved, several differences make the two Shopify funding solutions distinct. The repayment method, however, remains the same for both options, and businesses pay back with future sales. Lending ranges, too, remain comparable.

Types of Shopify Capital Funding

Shopify has two key financing solutions for businesses. Those are:

Shopify Capital Loans

Capital loans are Shopify’s offering to help businesses get quick access to much-needed financial assistance. Shopify capital loans are available for sums ranging as low as $200 to larger amounts going up to $1,000,000. The loan term often remains fixed and lasts for 12 months. The actual amount your business qualifies for depends on the nature of your business, its expertise, and the revenue it generates.

All Shopify capital loans are repaid through sales. Shopify will retain a decided-upon percentage of daily sales to recover the loan amount plus the company’s charges (these often include application, funding, and factoring charges.) This rate is referred to as the remittance rate. The base remittance rate for business loans is 10%. However, based on the loan offer, businesses might also have to pay a higher remittance rate.

Apart from this, Shopify splits the 12-month loan term into 6 phases marked by 60-day milestones. Businesses are expected to meet these milestones in their repayment journey. Each milestone has a minimum amount to be repaid at the end of the 60-day period. In case the sum paid is less than the minimum amount, the difference will be deducted from your bank account. In essence, your business will have to pay 1/6th of the loan amount every 60 days.

Shopify Merchant Advance

Shopify merchant advances are similar to Shopify capital loans and also have funding amounts ranging from $200 to $1,000,000 like their counterparts. The period remains the same as the capital loan option, except that there’s no fixed repayment amount or milestone. Instead, there’s only a percentage of daily sales you pay towards the merchant cash advance until it’s repaid in full, including Shopify’s charges.

Moreover, Shopify capital loans and merchant advances don’t charge an interest rate on the amounts offered to their customers. Instead, there’s a flat factor rate that usually begins at 1.1%. Merchant advances are far more flexible than Shopify’s capital loans and allow businesses to repay the loan amounts through their sales. Repayment rates, like their capital loan counterparts, start at 10% and will vary depending on the approved amount and the risk involved with the business.

Shopify Business Funding: Pros & Cons

Shopify funding has both advantages and disadvantages, just like every other capital solution.

Pros of Shopify Funding

Swift and easy funding process

Rapid disbursement times

E-commerce and financing platforms are linked, allowing you to streamline repayments

Opens up Shopify merchants’ options when it comes to financing

A wide range of funding amounts to suit a variety of business capacities

Repayment is based on sales and revenue generated by your Shopify store

Business owners can monitor repayment progress with ease

Shopify already has most of the business’ key details, making the application process short and with less paperwork

Cons of Shopify Funding

Shopify funding solutions are available only to the platform’s customers

Businesses can apply only if invited by Shopify

The criteria for qualification remain vague and are undisclosed to the public

Daily debits from sales revenue might not be suited to all business types

Shopify requires businesses to sign personal guarantees against the funding they receive

Despite comparable factoring and repayment rates, the costs run high when calculated on an annual basis

Businesses with good credentials can easily find better funding options outside of the Shopify framework

Businesses opting for the capital loan have to meet the 60-day milestones regardless of their sales revenue

Shopify Capital Requirements and Qualification Criteria

Shopify Capital invites businesses on its platform to apply for funding solutions. Business owners cannot apply for these options unless they receive the invite, making the selection process rather vague. While there’s no way of telling whether you’re eligible unless you receive an invite, here are a few basic requirements that Shopify might consider before allowing you to apply to their funding options.

Eligibility Criteria

Note: The below criteria are evaluated solely by Shopify before businesses are invited to apply for Shopify funding options. Business owners cannot initiate an application, regardless of their eligibility, without an invitation.

While Shopify merchant cash advances are available to all businesses registered with the platform so long as they’re within the US and Canada, business capital loans are only available to small business owners based out of the following US states:

Businesses applying for either of the business capital funding programs must be low-risk. Since the company does not explicitly define what it means by this, it is hard to pinpoint exactly what constitutes a risky operation. Although, it can be understood that businesses need to maintain a clear track record and deal with quality products in a well-performing industry.

While sales volumes are also expected to be adequate, Shopify does not mention any numbers in this regard. However, the company does monitor sales volumes before it considers a business eligible to be invited for the funding program.

Shopify’s Terms, Conditions, and Rates

Whether you opt for Shopify’s capital loan or merchant cash advance, the term period for the funding availed will be 12 months.
While the capital loan comes with 6 milestones of 60 days each spread over a year, the merchant cash advance has no such schedule.
Shopify only charges factor rates for its capital programs and these rates start at 1.1% and vary based on the business. Understanding this factor rate is simpler when it’s calculated in terms of APR (annual percentage rate). A business capital loan for $10,000 from Shopify at a 1.1% factor rate comes up to 19.61% in terms of APR. Similarly, a merchant cash advance for the same amount factored at 1.1% would be even higher at 42.63% APR.
As an example, if your repayment rates are pegged at 10% and your Shopify business revenue is around $300 on an average day, about $30 will be deducted from these sales to repay the funding amount.
All businesses that are eligible and receive an invite must also have a registered business bank account and business documents such as licenses.

Shopify Capital Alternatives for Small Businesses

Since Shopify’s business funding solutions are only available on an invite basis, businesses that don’t receive an invite might find themselves looking for other options. Below are several alternatives that might prove to be even more lucrative when compared to Shopify’s options.

Term Loan

These loans are available to business owners in a lumpsum amount and can be repaid through easy monthly installments. The principal amount is repaid in addition to a flat interest rate over a defined period based on the amount borrowed. These loans can either be secured or unsecured. In the case of the former, the borrower must furnish collateral or a guarantee. These loans do not require good credit scores, whereas unsecured loans often require favorable credit scores and are offered without collateral or guarantees.

Revolving Credit

This funding option allows businesses to borrow from a credit line offered to them. Businesses only withdraw as much as they need and repay the borrowed amount. Business owners are free to utilize funds from the credit line as and when the borrowed amount is repaid.

Credit Cards

Business credit cards are simple options for businesses to get quick access to money. Small business owners can utilize credit cards for a variety of purchases and procurements as long as the expenses remain within the credit limit. The amount will be repaid in monthly or weekly installments at a flat rate of interest. Businesses can also avail of credit cards to enhance their credit scores by using them and repaying on time.

Invoice/Accounts Receivable Factoring

This is one of the most business-friendly options available to entrepreneurs and allows them to sell a percentage of their invoices in exchange for funds. Companies like FundKite will purchase your business’ invoices and offer funds ranging from 70% to 90% of your invoices. This method works especially well for businesses that have to wait for their customers to pay them. No interest rates, credit scores, or collateral is involved, and the factoring firm only charges a flat factoring rate.

Merchant Cash Advance

Similar to Shopify Capital funding’s merchant cash advance option, this funding solution allows businesses to borrow a cash advance against credit card transactions. In case your business has significant credit card sales, you can choose to borrow against future transactions and the merchant cash advance firm will collect a percentage of your credit card sales as repayment.

Get Shopify Business Funding with FundKite

FundKite provides some of the best funding options for entrepreneurs seeking quick financial assistance. Our methods are unimpeded by the bureaucratic methods of banks and other financial institutions, and ensure you receive your funds in the shortest duration possible. Here are some of the unique advantages of working with FundKite:

Expert Underwriters:FundKite’s underwriting team is committed to providing you with a boutique-style financing experience. Our team carefully evaluates your requirements and provides the best possible funding solution.

No Interest Rates: Our funding solutions do not require interest rates for repayment. Instead, FundKite receives a mutually agreed-upon percentage of your accounts receivable as repayment for the funding provided.

Straightforward Qualification Criteria
FundKite has simple terms to qualify, these are:

FundKite also has no collateral requirements and does not emphasize your credit score.

With FundKite’s many benefits, Shopify businesses might find it more lucrative to explore their options and settle on a capital provider that prioritizes ease and speed of funding. Get in touch with FundKite to discuss your funding requirements today!

FundKite is an independent business funding provider and is not affiliated, associated, authorized, endorsed by, or in any way officially connected with Shopify Inc. or any of its subsidiaries or affiliates. The name “Shopify” as well as related names, marks, emblems, and images are registered trademarks of their respective owners