Shopify Capital review

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. And since your loan amount, rate and repayment are based on your Shopify account, there’s minimal paperwork.

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

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

Minimum credit score/credit range	None
APR	Not stated
Loan amounts	Up to $2,000,000
Terms	12-month term; repayment milestones every 60 days.
Turnaround	Typically 3–4 business days.
Fees	Not stated
Availability	By invitation only for existing Shopify merchants in the following states: AZ, ID, IL, IN, IA, KS, LA, ME, NC, SC, UT, WA, WV, WY.

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.

Minimum credit score/credit range	None
APR	Not stated
Loan amounts	Up to $2,000,000
Turnaround	Typically 3–4 business days.
Fees	Not stated
Availability	All 50 states but limited to existing Shopify merchants.

To see how much your business might pay every month, use our business loan calculator.

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.

1. Use Shopify Payments or another third-party payment provider
2. Meet Shopify’s sales volume requirements
3. 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 that’s 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. But loans are based on what Shopify expects your business will be able to afford to repay.

“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.

Shopify reviews and complaints

BBB accredited	Yes
BBB rating	A+
BBB customer reviews	1.12 out of 5 stars, based on 91 customer reviews
BBB customer complaints	429 customer complaints
Trustpilot Score	1.7 out of 5 stars, based on 1,546 customer reviews
Customer reviews verified as of	25 March 2023

None of the recent reviews on Shopify’s Trustpilot or Better Business Bureau pages cover its loan options. But there are multiple 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 any problems.

Is Shopify Capital legit?

Yes, Shopify Capital is a legitimate lender. It has funded more than $3.8 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 more than 25 years in the business. WebBank is also a member of the Federal Deposit Insurance Corporation (FDIC), which insures deposits up to $250,000.

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 during that time.

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.

Is Shopify Capital Funding worth it?

The answer to this 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 work out to be cheaper than other options depending on your fee. The longer the repayment term, the lower the effective APR is.

The key is to determine what the APR on your Shopify Capital offer is and then 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.