Shopify Capital FAQ

Table of Contents

1. Introduction
2. What is Shopify Capital?
3. How Does Shopify Capital Work?
4. Pros and Cons of Shopify Capital
5. Common Questions about Shopify Capital
6. Conclusion
7. Frequently Asked Questions (FAQs)

Introduction

Running a successful business often requires timely access to capital. Whether you’re looking to expand your inventory, invest in marketing, or cover operational costs, having a financial boost can make all the difference. For Shopify store owners, Shopify Capital offers a convenient solution. But what exactly is Shopify Capital, and how does it work? This extensive guide aims to answer all your questions about Shopify Capital, providing insights into its mechanics, eligibility criteria, repayment structures, and more.

By the end of this article, you'll have a comprehensive understanding of Shopify Capital, along with the information needed to decide if it’s the right option for your business.

What is Shopify Capital?

Overview

Shopify Capital is a financing program tailored for businesses using the Shopify platform. It offers merchant cash advances and loans to eligible businesses based on their store’s performance and location. Unlike traditional bank loans, Shopify Capital doesn't rely on your credit score but rather on the health and history of your Shopify store.

This service is available to businesses in the United States, Canada, the United Kingdom, and Australia. If eligible, you can view and apply for funding directly from your Shopify admin interface.

Eligibility

Eligibility for Shopify Capital is primarily determined based on your store's performance metrics. This includes factors like sales revenue, store age, and overall engagement with the Shopify platform. Offers for funding are personalized and can be found in the Capital section of your Shopify admin dashboard.

Types of Financing

Shopify Capital offers two main types of financing options:

• Merchant Cash Advance: A lump sum of money in exchange for a fixed percentage of future daily sales.
• Loans: A fixed amount of money with a predetermined repayment schedule.

How Does Shopify Capital Work?

Merchant Cash Advance

A merchant cash advance is a form of financing where Shopify purchases a portion of your future sales. The lump sum provided upfront is repaid through a fixed percentage of your daily sales until the total amount, plus a fee, is repaid.

For instance:

• If Shopify advances you $5,000, you might have to repay $5,650.
• The repayment rate might be 10% of your daily sales.

The repayment is automatic and adapts to your daily sales volume, which means higher repayments on good sales days and lower ones when sales are slow. There is no fixed repayment deadline, providing flexibility for businesses with fluctuating revenue.

Repayment Process

The repayment process for both merchant cash advances and loans utilizes a portion of your daily sales. The amount is directly debited from your business bank account and remitted to Shopify until the total repayment is completed.

Example:

Imagine you received a cash advance of $5,000 with a repayment rate of 10%. On a day when your store makes $1,000 in sales, $100 (10%) will be automatically deducted towards repaying the advance. This continues until the total amount of $5,650 is repaid.

Applying for Shopify Capital

If you’re eligible, Shopify will notify you via email and your admin dashboard. Once you decide to proceed:

1. Navigate to the Capital section of your Shopify admin.
2. Review the available funding offers.
3. Select the option that best suits your needs.
4. Submit your application for review.

Approval typically takes 1-3 business days, although it may take longer in some cases.

Tracking and Managing Funding

Once you’ve received the funding, you can monitor your repayment progress directly from your Shopify dashboard. This includes viewing daily repayment amounts, outstanding balances, and remaining obligations. Additionally, you can remit any outstanding balance as a lump sum if you wish to pay it off early.

Pros and Cons of Shopify Capital

Pros

• Speed and Convenience: The application and approval process is swift and integrated directly into your Shopify admin panel.
• Flexible Repayment: Repayments are a percentage of daily sales, which means payment amounts vary according to your daily revenue.
• No Credit Check: Since funding decisions are based on your store’s performance rather than credit scores, this can be advantageous for businesses with lower credit ratings.

Cons

• Cost: The fixed fee added to the advanced amount can be higher compared to traditional business loans.
• Eligibility Restrictions: Not all Shopify stores will qualify; eligibility is closely tied to sales performance and location.
• Repayment Fluctuations: While flexible, the variable daily repayment can make it challenging to predict financial outflows precisely.

Common Questions about Shopify Capital

Who Can Apply for Shopify Capital?

Shopify Capital is available to businesses in the United States, Canada, the United Kingdom, and Australia. Eligibility is determined through a combination of your store’s sales history, performance metrics, and overall engagement on the Shopify platform.

How to Apply?

If you’re eligible, you can view and apply for available funding options directly from your Shopify admin dashboard. The application process requires reviewing available funding offers and submitting a request for the desired amount.

Can I Get More Than One Advance?

Yes, businesses can apply for additional merchant cash advances or loans once a significant portion (typically around 65% or more) of the existing advance is repaid. New offers can be viewed and applied for through the Shopify admin.

What Happens If Sales Drop?

One of the benefits of Shopify Capital is its flexibility in handling repayment. Because repayments are based on a percentage of daily sales, lower sales days result in lower repayments, reducing financial pressure. However, it’s essential to manage cash flow to ensure sufficient funds for automatic daily debits.

Conclusion

Shopify Capital presents a flexible and accessible funding solution tailored for Shopify merchants. By understanding the ins and outs of merchant cash advances and loans offered by Shopify Capital, you empower yourself to make informed decisions that contribute to your business’s growth and stability.

With personalized offers, an easy application process, and flexible repayment terms, Shopify Capital can be a valuable tool for many businesses. As with any financial decision, weighing the costs and benefits carefully to determine if it aligns with your business goals is crucial.

Frequently Asked Questions (FAQs)

What is Shopify Capital?

Shopify Capital is a financing program that provides eligible Shopify merchants with cash advances or loans to help grow and manage their businesses.

How are repayments made?

Repayments are made as a fixed percentage of daily sales and are automatically debited from your business bank account.

How do I know if I'm eligible?

Eligibility notifications are sent via email and displayed in the Shopify admin dashboard. Your store’s sales performance and engagement with the platform primarily determine eligibility.

Is there a credit check?

No, Shopify Capital does not rely on your credit score for eligibility; it is based on store performance metrics.

Can I pay off the advance early?

Yes, you can remit the remaining balance at any time as a lump sum from your Shopify admin.

What happens if my application is denied?

If your application is denied, you can generally reapply at a later date once your store’s performance improves. Details on improving your eligibility are also available in your Shopify admin.

By leveraging Shopify Capital, businesses can gain the financial flexibility needed to seize new opportunities and navigate challenges, ensuring sustained growth and success.