Shopify Capital Review: Easy But Potentially Costly Cash

Is Shopify Capital legit?

Shopify Capital is a legitimate lender. It has funded more than $5.1 billion in working capital for its merchants. Independent auditors regularly assess its data storage and systems security, and its website uses encryption technology.

All its loans in the US are funded through WebBank, a chartered industrial bank with over 25 years in the business. WebBank is also a member of the Federal Deposit Insurance Corporation (FDIC), which insures deposits up to $250,000.

What makes Shopify Capital shine

Shopify Credit offers short-term loans and merchant cash advances for businesses that use a Shopify point-of-sale system. If you have the sales volume to support repayment, it’s easy to qualify. Your loan amount, rate and repayment are based on your Shopify account, so there’s minimal paperwork.

Shopify Capital’s automated underwriting and repayment system makes it a lot faster and simpler than applying for a traditional bank loan.

Richard Shaw, Lead Product Manager at Shopify, tells Finder, “Our machine learning and AI models are key ingredients in Shopify Capital’s speed and accuracy to provide funding. By reviewing a merchant’s past sales and store performance, we can avoid having to request interviews, review credit history, request lengthy applications or review business plans.”

What really sets it apart is that you don’t need to apply to review your offers — all you have to do is log in to your account to see what’s available. Plus, your Shopify dashboard tracks and displays all your repayments for easy viewing.

Where Shopify Capital falls short

Shopify Capital is only available to existing customers, and you can’t apply for funding yourself. If you need a loan and haven’t already received an offer from Shopify, you’ll need to explore your options elsewhere.

While Shopify doesn’t disclose rates or fees, we’ve found that products like this are some of the most expensive types of financing available. And even if you have bad credit, it’s possible to find faster funding options out there. Most e-commerce platforms that offer financing can fund your loan the same day you apply, where Shopify can take two days to fund plus approval time.

Repayments come from a percentage of your daily sales, so your daily profit is limited. With the Shopify loan, you also need to repay one-sixth of the total loan amount every 60-day milestone, regardless of your sales.

Shopify Capital product details

Shopify Capital contact info

Shopify Capital business loans

Shopify capital has two funding products: a business loan and a merchant cash advance. While the total fees and available amounts are similar, the repayment structure is where these two products diverge.

Shopify Capital loan

The Shopify Capital loan works a lot like a merchant cash advance. It gives you an advance on your business’s future sales up to $2 million, which you repay plus a fixed fee with a percentage of your daily sales.

Shopify doesn’t charge interest on its loans. Instead, it charges a fixed fee, based on your sales history. While it doesn’t advertise the minimum and maximum fee, the example on its website cites a $5,000 loan with a $650 fee. That works out to an APR of around 20%.

Each Shopify Capital loan comes with a 12-month term. Instead of monthly installments, Shopify collects a percentage of the sales you run through its payment processor each day. Shopify also doesn’t disclose the range of daily percentages it charges, but uses a 10% repayment rate in the example on its site.

Shopify loans also come with minimum payments every 60 days, which it calls “milestones.” If your business’s daily repayments are too low to meet a milestone, the company deducts the difference from your business bank account.

Shopify Capital merchant cash advance

Like the loan, Shopify Capital’s merchant cash advance gives your business an advance on future shopify sales, which you repay with a fixed fee.

Shopify Capital also charges a fixed fee, called a factor rate, based on sales for its merchant cash advance — which it also doesn’t advertise. And borrowers generally repay the advance with a percentage of daily Shopify sales. Here, Shopify uses the term “remittance rate” to describe repayments for its merchant cash advance, instead of the “repayment rate” it uses for loans. But they are functionally the same thing.

However, there are no terms or milestones with the merchant cash advance. Once you’ve paid off at least 25% of your balance with a percentage of daily sales, you have the option to pay off the rest of the balance in one lump sum. But this is not required. If you don’t make any additional payments, the term of your merchant cash advance depends on your Shopify sales volume.

How to qualify for a Shopify Capital business loan

Shopify Capital only has a few hard requirements for its term loan or lines of credit.

• Use Shopify Payments or another third-party payment provider
• Meet Shopify’s sales volume requirements
• Have a low-risk business profile

Like fees, it doesn’t disclose sales volume requirements or what it considers to be a low-risk business profile. But having bad personal credit or few personal assets probably won’t get you disqualified.

“We don’t look at individuals’ personal financial history,” says Shaw. “We look at their business and make funding decisions on that basis alone. Reviewing credit scores and other personal details are barriers that disproportionately disadvantage merchants of underrepresented backgrounds.”

How to apply for a Shopify Capital loan

Shopify Capital’s application works by sending out offers to merchants who are eligible for financing. You can view your offer and request funds by following these steps:

1. Log in to your Shopify account.
2. Choose the Settings menu and select Capital.
3. Look for an eligibility message from Shopify Capital and hit View funding offers.
4. Compare your offers and select the one closest to what your business needs to borrow with repayment terms you can afford.
5. Follow the instructions to review the terms and conditions before submitting your request.

Unlike most business loans, you can’t request a specific funding amount. However, loans are based on what Shopify expects your business to be able to afford.

“Above certain funding thresholds, our staff may fact-check Capital’s data-informed process to ensure a merchant receives the funding they need to help grow their business,” Shaw says.

But generally, that’s not the case. “Merchants can typically access and accept Capital funding within a few clicks from within Shopify, allowing them to receive funding within two to five business days.”

How Shopify Capital compares to other lenders

Here’s how Shopify Capital stacks up to two alternatives that work with less-than-perfect credit and require minimal paperwork.

1 - 6 of 6

Updated regularly

Product USFBL	Finder Score	Min. Amount	Max. Amount	APR	Requirements
Olympus Business Capital	Finder score 9 Excellent	$500	$250,000	Not stated	Been in business for 6 months registered with the state, active and open bank account in business name, have $10,000 of revenue each month	No credit needed. Funding up to $250,000 with a variety of finance options to best fit your business needs.	Go to site Compare	loading Fetching your data...
Lendio business loans	Finder score 9.6 Excellent	$1,000	$10,000,000	Varies by lender	Operate business in US or Canada for 6 months or more, have a business bank account, minimum 520 personal credit score, at least $8,000 in monthly revenue.	Submit one simple application to potentially get offers from a network of over 75 legit business lenders.	Go to siteMore Info Compare	loading Fetching your data...
Fundera business loans	Finder score 8.6 Great	$2,500	$5,000,000	Varies based on lenders	$60,000+ of annual revenue, 550+ personal credit score, in business for 6+ months	Get connected with short-term funding, SBA loans, lines of credit and more.	Go to siteMore Info Compare	loading Fetching your data...
Fora Financial business loans	Finder score 8.8 Great	$5,000	$1,500,000	Varies	6+ months in business, $25,000+ gross monthly sales, no open bankruptcies	Get qualified for funding in minutes for up to $1,500,000 without affecting your credit score. Best for companies with at least six figures in annual revenue.	Go to siteMore Info Compare	loading Fetching your data...
National Funding business loans	Finder score 9.6 Excellent	$5,000	$500,000	Undisclosed	In business 6+ months and make at least $250,000 in annual sales. Other loan types have additional requirements.	Working capital loans and equipment financing, some high-risk industries may be eligible.	Go to site Compare	loading Fetching your data...
American Express® Business Line of Credit	Finder score 8 Great	$2,000	$250,000	N/A	Minimum FICO score of at least 660 at the time of application, have started your business at least a year ago, and an average monthly revenue of at least $3,000	Access lines of credit for your small business even if you aren't currently an Amex customer.	Go to siteMore Info Compare	loading Fetching your data...

loading

Shopify reviews and complaints

None of the recent reviews on Shopify’s Trustpilot or Better Business Bureau pages cover its loan options. But there are negative complaints about difficulty communicating with customer service and problems processing payments. With this history, it may be difficult to get help with your loan if you run into problems.

Frequently asked questions

How long do you need to be a customer to qualify for Shopify Capital?

To qualify for Shopify Capital, you need to sell on Shopify for at least 90 days and demonstrate consistent sales.

How often can you get Shopify Capital?

You may be eligible for another Shopify Capital loan once you’ve repaid at least 65% of your current loan. If eligible, you’ll see new funding options displayed in your Shopify admin on the Capital page.

Should you use Shopify Capital?

It depends on the APR you’re getting on your Shopify loan. For example, if you borrow a low amount with a maximum repayment rate of 10% of your sales that can be repaid over several months, it may be cheaper than other options, depending on your fee. The longer the repayment term, the lower the effective APR is.

Determine the APR on your Shopify Capital offer and compare it to the APRs available on other short-term business loans and financing options, like invoice factoring, lines of credit and business credit cards from other lenders.

To learn more about the rates you can expect to pay on different types of business loans, see our guide on comparing business loan interest rates.

Does Shopify Capital affect your credit score?

No, Shopify Capital doesn’t affect your credit score. The offers are based on an assessment of your business, not your personal credit, and there are no hard credit checks or personal credit checks involved. Shopify Capital evaluates your business’s performance to determine eligibility for funding.

How much does Shopify Capital give?

The Shopify Capital loan gives you an advance on your business’s future sales up to $2 million.

Do you have to pay back Shopify Capital?

Yes, you must repay your Shopify Capital loans. You can make automatic, flexible payments that fit your business, and payments are a set percent of your daily sales. Instead of charging interest on loans, Shopify charges a fixed fee based on your sales history.