You may know Shopify as the world’s largest eCommerce platform. While they are better known for that, they’ve recently moved into the business funding industry. You can now get Shopify funding through Shopify Capital.
Shopify Capital was launched in early 2020. The idea was simple. They’ve already made it easier for anyone who has internet access to become an online merchant. But now they also want to help them with, especially small startup loans. Unlike the business loans you’ll find elsewhere, Shopify funding comes in very small sums. So, let’s delve deeper into how Shopify funding from Shopify Capital can help you.
Special Qualities & Features
Easy Startup Process
Shopify funding comes with relaxed borrower qualifications. The funding they provide is small and restricted, but not difficult to qualify for. That’s because their funding is meant to help you get started as an online merchant.
Ideal For Small Startups
The main catch with Shopify Funding is that it’s only usable for Shopify users. But it’s the best funding you’ll get for a small eCommerce startup.
Shopify funding comes in the form of either a merchant cash advance or a short-term installment loan. There are several important differences between these funding options. But both are short-term and in the case of Shopify won’t add up to a large sum.
Huge Range Of Funding Options
Shopify Capital offers among the widest ranges of funding options of any business funding provider. If you’re considered low-income, you can still receive some funding in most cases. But they also offer far more funding to large eCommerce businesses if your sales can justify it.
Transparency
Shopify is a giant in the eCommerce industry. They are transparent and offer great customer support if you have any questions or concerns.
Explanations for business funding products can be confusing. But Shopify does an excellent job of explaining their products’ expenses on their website.
Shopify Funding Pricing & Terms
Shopify funding comes in the form of either:
- A short-term installment loan
- A merchant cash advance
Funding amounts range from USD 200 to USD 1,000,000 for American businesses. Canadian businesses can receive CAD 200 to CAD 500,000.
Merchant Cash Advances
Shopify merchant cash advance factor rates are simple. Your factor rate will be either 1.1 or 1.13. For a simple example, if you take an advance of $1,000, you will pay either $1,100 or $1,130 back to Shopify.
As we’ve discussed, merchant cash advances aren’t repaid in installments. Instead, they will automatically collect a small portion of your sales until the advance has been paid back in full. You will have to pay this automatic remittance until you’ve either paid the advance back or until you’ve paid 25% back. Once you’ve paid back 25% of your advance, you’ll have the option to repay your entire balance in one lump payment.
Because your repayments are automated portions of your sales, there is no set deadline for repayments. Your automated payments will fluctuate with your sales, so if you make less money through sales, your repayments will be smaller.
Term Loans
Term loans from Shopify Capital also carry the same factor rates. They collect repayments differently from most lenders.
Shopify Capital gives you 12 months to repay a term loan. They will send you milestones for every 2 months to keep the repayment process simple. So, you’ll have to repay 1/6th of your total loan balance every 60 days.
Do I Qualify For Shopify Funding?
The answer is probably yes. Unlike traditional lenders or professional alternative lenders, Shopify doesn’t have a laundry list of borrower requirements. They don’t even list any credit score or income requirement for their funding. Instead, they judge you for your risk profile and sales figures.
The minimum requirements for Shopify funding are:
- A business located in the US or Canada
- A store with Shopify Payments or another third-party payment provider
- An unspecified minimum amount of sales
Shopify Capital is a young and modern business funding provider. As such, they are constantly re-assessing factors such as the minimum sales you need to qualify. They also process applications from many stores.
If you’re ineligible for Shopify funding when you apply, they’ll send you an email to let you know. But that doesn’t mean you won’t be eligible later. They may give you an alternative offer in the future, so check your emails, and don’t be afraid to apply twice.
Factors To Keep In Mind With Shopify Funding
Fees Can Be Expensive
The factor rates we mentioned are not paid for in the same way that traditional loans are. The repayment process can cut away at your profit margins if you’re not careful.
If you do your research in advance, you can plan ahead for Shopify’s repayment process. If you do so and you know you can afford your Shopify funding, you shouldn’t face any significant financial challenges.
The Last Word On Shopify Funding
Shopify funding is unique and offers a niche financing service. If you’re trying to break into the eCommerce industry or expand an eCommerce business, their new offers are worth considering. What Shopify funding offers you is a niche funding product tailored to eCommerce businesses. All with the backing of a globally recognized and trusted company with strong customer support.
