Running an online store comes with a lot of expenses, such as inventory, advertising, new tools, staff salaries, and sometimes you just need extra cash to keep things moving. If you’re a Shopify merchant, you might have read about Shopify Capital Funding or seen the offer pop up on your dashboard.
It sounds tempting: fast money, no lengthy paperwork to apply for the Shopify Capital loan. But how exactly does it work? And is it the right move for your business?
In this guide, I’ll walk you through everything you need to know about the Shopify loan eligibility, with real-world examples, clear explanations, and advice based on my own ecommerce experience.
What Is Shopify Capital?
Shopify Capital is Shopify’s in-house funding program for merchants. Instead of applying for a loan at a bank, Shopify itself offers you money based on how your store is performing.
Shopify won’t require a business plan or check your credit score. They primarily consider your store’s sales history, locations, and overall compliance with the Shopify terms and conditions to determine eligibility for funding.
There are two types of funding Shopify offers, depending on your store location:
Merchant cash advances
Shopify provides a lump sum upfront, and you repay it by giving them a small percentage of your daily sales until the amount is paid back, plus a fixed funding fee.
However, merchants’ cash advances do not have fixed repayment terms. You repay more on a busy sales day and less on a less busy sales day. This gives you more flexibility and room to repay the loan according to the sales trend.
Shopify offers merchant cash advances to qualified small business owners in Canada and the United Kingdom.
Shopify Capital loans
Similar to a Shopify cash advance, but with more structured repayment terms. Shopify Capital Loan provides eligible merchants with tailored loans from as low as $200 to $ 2 million.
The repayment plan is fixed. You repay the loan with a predetermined percentage of your daily sales. The repayment percentage depends on the loan amount. Typically, higher loan amounts attract higher funding fees and daily sales percentage remittance.
For example, you pay 14% of your daily store sales for a Shopify Capital loan financing of $2,000, plus a funding fee of $200, totalling $2,200.
Shopify Capital Loan is available to businesses operating within the United States and Australia.
In both cases, the idea is simple. You get fast funding without the red tape, but it comes at a cost, which I’ll break down in a minute.
How Does Shopify Capital Work?
Let’s say you’ve been running your store for a while, and your sales are steady. Shopify’s system tracks your performance and may send you an offer.
You’ll usually see a few options, each showing how much funding you can get, the fee you’ll pay, and what percentage of your daily sales will go toward repayment.
Here’s a quick example:
- Offer: $10,000
- Total to repay: $11,300 (includes $1,300 fee)
- Daily repayment: 10% of your sales
If you accept the offer, you can customize the funding details accordingly. Then you need to submit it to indicate your acceptance to receive the funding.
Shopify will review it, and if qualified, Shopify will deposit the $10,000 into your business bank account in your store’s local currency. Every day, they automatically take 10% of your store’s sales until you’ve repaid the $11,300. If you have a great sales day, you pay back a little more. If you have a slow day, you pay back less.
There is no set time frame, but Shopify expects repayment within approximately 18 months. If your sales slow down significantly, you may be required to make a minimum payment after a certain period; however, repayments typically adjust naturally in line with your revenue.
Note:
Because you receive an offer does not automatically mean you’re qualified to receive funding. Your application will still undergo Shopify underwriting reviews, based on your store’s current standing. If things have changed, your application may be denied. However, you can still apply in the future when another offer is available.
Another thing to note is that you can receive a second loan offer from Shopify while still paying off your current loan. I think this is a result of your store’s good standing and sales record.
Rates, Fees, and Repayment Terms
One thing you need to know upfront: Shopify Capital doesn’t charge interest the way a standard bank loan would. Instead, they charge a flat funding fee on top of the money you borrow.
Here’s how it looks in real numbers:
Let’s say Shopify offers you $20,000 with a $2,600 fee. That means you’ll repay a total of $22,600. The fee doesn’t change based on how quickly you repay it. Whether it takes you four months or twelve months, you’ll still owe $22,600.
Repayment happens automatically through your sales. Shopify takes a set percentage of every sale you make, typically ranging from 8% to 10% or even 15%. The exact Shopify loan rate depends on the size of your funding and the strength of your sales history.
Note:
Aside from the daily automatic repayment via store sales, you can choose to repay a fixed amount monthly. This help toward paying off the total loan quickly.
If your store has a great month, you’ll pay down the loan faster. If you experience a slow season, your payments decrease because they’re directly tied to your sales volume.
However, Shopify expects the full amount to be repaid within a specific period, typically 18 months. If you’re falling behind, they might step in and require a small minimum payment after a while to keep you on track.
Important: You can’t repay Shopify Capital early to avoid fees. The fee is fixed from the outset, regardless of the circumstances.
This system is good if your sales are unpredictable because your payments adjust naturally. But it can also mean you end up paying a lot in fees compared to traditional loans, especially if you could have qualified for cheaper financing elsewhere.
Who Is Eligible for Shopify Capital?
Not every merchant gets access to the Shopify Capital loan offer. You can’t just apply for the Shopify lending program whenever you want. Shopify determines who receives an offer primarily based on your store’s track record and the eligible country in which you are located.
Here’s what they usually look for:
- Sales history: Your store needs to show consistent sales over a period of time. New stores with only a few months of activity usually won’t get an offer.
- Shopify Payments usage: In most cases, you must be using Shopify Payments as your primary payment processor. If you’re using PayPal or another third-party provider exclusively, you’re less likely to qualify. Also, you can’t deactivate Shopify Payments if you have an ongoing Shopify business funding.
- Good standing: Your account must be in good standing. That means no serious chargeback problems, no violations of Shopify’s terms, and no outstanding debts on your account.
Shopify lending uses internal data to decide whether you’re eligible, and the offer will show up right in your dashboard if you qualify. There is no application that you can fill out ahead of time to speed up the process.
Where It’s Available
Shopify Capital isn’t yet available everywhere. As of now, it’s open to merchants based in:
- The United States (most states, but not all)
- Canada
- The United Kingdom
- Australia (starting to expand slowly)
For example, if you’re running your Shopify store from California or Ontario, you’re probably eligible once your sales history is strong enough.
If your business is based in an eligible country but you haven’t received an offer, it means your store currently does not meet the program’s minimum Shopify loan requirements. Continue to grow your store, maintain strong customer relationships, and increase sales volume, and you will likely receive an offer sooner.
However, if you’re based in a country that Shopify Capital doesn’t support yet, you won’t see any offers, regardless of how well your store performs. Also, Shopify store owners operating as a trust or partnership are not eligible (at the time of writing this article).
Stay informed about Shopify store announcements if you operate such business entities, as this may indicate when your store may qualify for Shopify Capital.
Pros and Cons of Shopify Capital
Before accepting any funding offer, it’s essential to weigh both the benefits and drawbacks. Shopify Capital can be a real lifesaver for some businesses, but it isn’t perfect for everyone.
Pros
One of the most significant advantages of Shopify Capital is its ease of use. You don’t need to fill out long forms or wait weeks for approval. If Shopify determines that you qualify, the offer will appear in your dashboard, and you can receive the funds in your account within a few days.
Another plus is that Shopify doesn’t run a personal credit check. That means you can get Shopify Capital funding even if your credit score isn’t great, as long as your store is doing well. This can be a massive relief if you’ve had trouble getting loans from banks or other lenders.
The Shopify loan repayment system is also flexible. Because payments are tied to your daily sales, you don’t have to worry about making a big loan payment when you’re having a slow month. You pay more when you earn more, and you pay less when things are quiet.
Cons
That said, there are some real downsides you should think about carefully.
First, the cost of borrowing from Shopify can be high. Since the fee is fixed from the start and doesn’t change if you pay back faster, you could end up paying more compared to a traditional small business loan with interest.
Another downside is that you have little to no say in the terms. You can choose between a few offer amounts and repayment rates, but you can not negotiate the Shopify loan fees or the repayment percentage.
What you see is what you get.
Finally, Shopify Capital is only available if you qualify.
If you’re running a newer store, have inconsistent sales, or aren’t using Shopify Payments, you might never even see an offer. And if you do get one, the funding amount might be smaller than what you were hoping for.
Is Shopify Capital Right for Your Business?
Shopify Capital loan can be a good fit, but it ultimately depends on what you need the money for and your business’s financial situation.
If you’re growing steadily and need quick cash to stock up on inventory, launch a marketing campaign, or handle unexpected costs, it can make a lot of sense.
The speed and simplicity of obtaining Shopify lending without jumping through hoops are hard to beat. I’ve seen many merchants use Shopify Capital to navigate busy seasons, such as Black Friday, or to bulk up on inventory before a product launch.
But if your store’s profit margins are thin or your sales are unpredictable, you have to be careful. Since a chunk of your daily sales goes toward repayment, it could squeeze your cash flow more than you realize.
You might find yourself short on money for things like ads or other vital expenses at the worst possible time.
Also, if you have access to cheaper financing options, like a small business line of credit from your bank or a Shopify-specific credit card with better rates, those might save you money in the long run.
It’s essential to review the numbers before accepting the Shopify Capital loan offer.
Look at how much you’re paying in fees, and think about how the daily repayment will impact your ability to operate day-to-day. If you’re unsure, it may be helpful to wait until your business is stronger or explore other funding options first.
In short, Shopify Capital is a helpful tool when used wisely. It’s not free money, and it’s not the cheapest funding available, but for many growing stores, it’s exactly the boost they need to move to the next level.
How to Apply and What Happens Next
Applying for Shopify Capital isn’t like applying for a normal loan. You don’t actually start the process yourself. Shopify monitors your store’s performance, and if you qualify, they send you a pre-approved offer directly to your Shopify admin dashboard (under Finance).
When you log in, you’ll see a message indicating that Shopify funding options are available. You’ll usually be given a few choices with different amounts and repayment rates. You can select the one that best fits your needs, or decline the offer if you’re not interested.
Once you accept, you need fill out the application and submit. Shopiy will review it and either approve or decline it. If approved, Shopify sends the money directly to your linked business bank account, usually within two to five business days.
Typically, there is no paperwork, no personal credit check, and no waiting around for weeks to hear back; however, Shopify may request additional information if necessary. You may be required to provide the primary business owner’s Social Security number, date of birth, balance sheet, contact information, and address.
Once the funding is disbursed, Shopify automatically starts collecting the daily percentage from your sales until you’ve repaid the total amount (loan + fixed fee). You don’t need to make payments manually, but it’s a good idea to keep an eye on your dashboard. Shopify provides a repayment tracker, allowing you to always see how much you’ve paid and what you still owe.
If your sales dip and you’re not making much progress, Shopify may request a small minimum payment after a while. But for most merchants, the daily sales percentages handle the repayment smoothly without much thought.
Once you accept the funding, Shopify Capital runs mostly in the background while you focus on running your business.
Conclusion
Shopify Capital can be a real advantage if you need fast, simple funding to grow your business. It’s designed to work alongside your store’s cash flow, without the headaches of traditional loans.
Still, it’s not free money, and it’s not the cheapest option out there.
Before you accept an offer, make sure it fits your business goals and that you’re comfortable with the daily repayment setup. Used the right way, Shopify Capital can help you take your store to the next level without slowing you down.