Many business owners struggle to secure the initial funding needed to start or expand their companies. And for most small companies, securing timely funding from traditional sources is nearly impossible.
Luckily, today there are a number of funding sources available for businesses like yours. However, alternative financing may be less familiar, and accepting money from new avenues can feel daunting. But it doesn’t have to. If you’ve already trusted Shopify to power your business, you can trust us to help finance it too.
Since 2016, Shopify Capital has made over $4 billion available to thousands of Shopify businesses, with accessible funding amounts as low as $200 and as high as $2 million.
Let’s take a closer look at Shopify Capital, what it is, what it’s not, and how it’s purpose-driven for growth.
Shopify Capital offers loans and merchant cash advances to eligible businesses. If your store is eligible to apply for funding through Capital, you’ll receive an email from Shopify and a message on the Home page of your Shopify admin.
Now that we’ve discussed what Shopify Capital is, let’s look at five myths often attributed to business funding providers and show how Shopify Capital is different.
Inflation is rising, and business priorities are shifting amid an uncertain economic climate. So it makes sense to be cautious about any money moves you make right now.
And frankly, some unscrupulous lenders out there are looking to target small businesses with predatory lending practices that will make paying back any loan you take out extremely difficult.
But Shopify Capital isn’t like traditional sources of funding; here’s how:
Eligibility is based on sales
Most traditional financing options will want to see tons of paperwork, showing a positive net worth and a history of your business performance. But Shopify already knows your business. We use machine learning to understand your store’s performance and determine your eligibility for funding and how much you can safely borrow and pay back without causing a strain on your finances.
There are no personal credit checks
You don’t have to worry about your personal credit score taking a hit due to a hard inquiry from a funding application.
If you’ve bootstrapped your business, the last thing you want to do is hand over the keys to your kingdom. And you don’t have to.
We’re not venture capitalists and won’t take shares in your company. Shopify is invested in your growth. And shops funded through Shopify Capital, on average, experienced 36% higher sales in the following six months compared to their peers1.
There are several reasons why a business might not be approved for traditional financing and many reasons why you may not want it in the first place. For example:
Business funding through Shopify Capital can be approved much more quickly than traditional sources of funding
Getting traditional funding could take weeks or even months. This can be critically important when taking advantage of short-term opportunities in the marketplace. With Shopify Capital, there’s no lengthy approval process. Instead, you know upfront if you’re eligible to apply and how much funding you are eligible to receive, if approved.
If approved, you could receive funding from Capital in as little as two business days.
Non-traditional business funding companies can typically offer more flexible terms
A traditional loan may have a 12-month term or longer.
With Shopify Capital, there are no payment milestones and no fixed term. Shopify deducts your payment amount from your daily sales until the whole advance or loan and the cost of funding is paid in full.
Capital has a fixed cost of borrowing
Traditional funding options have developed a bad reputation for charging excessive fees. When it comes to loans and lines of credit, there’s the interest rate, application fee, monthly fee, and annual fee.
And while most traditional lenders are hiking up their rates, Capital rates have remained steady.
Capital doesn’t offer financing the way traditional funding sources do—by charging interest on loans. Instead, we charge a fixed fee and let you know exactly how much you’re expected to pay before accepting funding through Shopify Capital. The amount doesn’t change over the life of the funding.
With Shopify Capital, your store’s sales performance history determines funding amount. The higher your sales, the more funding you could be eligible for.
And unlike with traditional funding, Capital funding can be used any way you want for your business.
Top uses include purchasing inventory, investing in marketing, cash flow, expanding into retail, new market expansion, or launching new products.
While your business may not be ready to fund a new piece of equipment, you may be able to up your advertising budget to drive new customers to your store and over time, grow your business to the point where you can afford a larger purchase to drive more growth.
Shopify Capital is fast, flexible, and accessible. You can check your eligibility directly from the Capital page of your Shopify admin.
1The statistic is based on the geometric average of merchants’ six months’ cumulative GMV after taking the first round of Shopify Capital. Propensity score matching was used for pairing of the groups. The study makes further assumptions including equality of access to external funding and similar market trends in the US and Canada.
Results may vary for every merchant.
All loans through Shopify Capital are issued by WebBank.