Shopify offers some store owners quick access to funding for inventory, equipment, expansion and more. But because Shopify Capital is invite-only, many sellers are left without the financing they need to grow. In this guide, we’ll explore alternative options — some with more flexibility, better terms or wider eligibility than Shopify Capital.
Key takeaways
Shopify Capital is invite-only funding for existing Shopify merchants, offering short-term loans or MCAs from about $200 up to $2 million, priced with a fixed factor fee and repaid from a cut of daily sales.
It’s fast and easy — minimal paperwork, no credit checks and funds can arrive in as little as two business days.
The trade-off is cost and cash-flow pressure. Factor pricing can translate to very high effective APRs and daily remittances can bite into working capital; loans must generally be paid off within 18 months with certain minimum payments.
Eligibility is limited. Offers depend on your store’s sales metrics and are typically available only within the Shopify ecosystem.
What is Shopify Capital?
Shopify Capital is a financing program that’s offered directly to store owners by Shopify. It provides loans between $200 and $2 million and charges factor rates on the borrowed amount instead of interest. The loan (plus the factor rate fee) is repaid as a portion of your daily sales. It’s automatically deducted, so you don’t have to worry about missing payments.
Shopify Capital loans are only available by invitation, so you can’t apply unless Shopify makes you an offer. Invitations are typically sent via email and as a notification on your Shopify admin dashboard.
Eligibility for Shopify Capital is determined by the company’s underwriting model, which considers your sales, customer engagement, disputes and time in business. To qualify, you must sell on Shopify for 90 days or more, but no other specific requirements are provided.
What are the limitations of Shopify Capital?
The biggest limitation is that Shopify Capital is invitation-only. Shopify determines who qualifies for a loan, then sends them a notification asking if they’d like to take out a loan. Spotify also doesn’t disclose exactly how they determine eligibility, so you can’t improve your business in hopes of getting an offer. This exclusivity makes it difficult for many Shopify store owners to get the funding they need.
Another drawback is the fee structure. Instead of charging an interest rate, Shopify uses factor rates that are reportedly between 1.1 and 1.13. So, if you borrow $100,000 at a factor rate of 1.12, you must repay $1.12 for every dollar you borrow (or $120,000 total), which can make this a bit more expensive than other business loans. And since payments are automatically deducted as a percentage of your daily sales, it could cut into your cash flow.
Shopify business loan alternatives worth considering
Shopify might seem like the obvious choice if you operate a Shopify store, but that may not be the case. If you didn’t receive an invitation to Shopify Capital, the daily repayments are too much of a burden or you have other objections to the terms, check out the options below for other possibilities.
Term loans
A term loan is when you receive a lump sum of cash that you repay with fixed payments over a predetermined period. This option might be a good fit for Shopify store owners who prefer a set payment every month instead of one that fluctuates with their sales. Your repayment period is also determined in advance with a term loan. With Shopify Capital, you continue to repay a certain percentage of sales until the debt is repaid.
Lenders will check your credit score to determine whether you qualify for a term loan (which Shopify Capital doesn’t do). You’ll also need strong business financials with consistent revenue and at least six months to two years in business. If this sounds like a good option for you, compare multiple top lenders offering term loans to get the best offer.
Business lines of credit
With a business line of credit, you’re approved for a set limit that you can borrow against whenever you need funds. And it’s not just a one-time loan — you can borrow, repay and borrow again as needed. This type of flexibility is great for covering unexpected expenses, managing seasonal sales dips or bridging temporary gaps in your cash flow.
When compared to Shopify Capital, this may be a better option if you want to borrow repeatedly. It’s also a good choice if you want to save on financing fees or you’d prefer to repay monthly instead of daily. Check out our top business lines of credit to find the best deal.
Business credit cards
Business credit cards are another good choice if you’re looking for flexibility. Like a personal credit card, a business credit card has a predetermined limit that you can borrow against at any time. This allows you to get the cash you need when you need it instead of in one big lump sum. And you only need to make a payment every month, instead of every day like Shopify Capital requires.
APRs on business credit cards are typically variable and higher than rates on a business line of credit, but you might get an introductory offer of 0% APR, which makes this option more affordable.
Merchant cash advances (MCAs)
A merchant cash advance is a good option if you want to borrow from Shopify Capital but haven’t received an invitation. It’s essentially the same type of product that Shopify Capital offers. You get a lump sum up front, then pay back the loan and factor rate fee through a percentage of daily sales.
MCAs are easier to qualify for than other types of funding since approval is based primarily on revenue, not your credit score. But it is an expensive form of borrowing, and daily payments could strain your cash flow.
Equipment financing
If you’re wanting to use Shopify Capital to buy equipment but haven’t received an invitation or don’t want daily repayments, here’s a bit of good news: you can apply for an equipment loan instead. The equipment you buy is used as collateral for the loan, which lowers your interest rate and makes this more affordable than Shopify Capital.
Equipment loans also offer set monthly repayments, so you can budget more easily. But you may be required to make a down payment, and credit scores are considered, so it might not be the best fit if your credit score is low or money is tight.
Compare alternatives to Shopify Capital loans
If you own a Shopify store and need funding, the lenders below may be a better fit than Shopify Capital. Compare them to see what loan amounts, rates and repayment terms are available.
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Before offering funding, lenders want to know that your Shopify store can repay what you borrow. While every lender is different, most look at the following factors:
Time in business. Lenders usually want to see at least six months to two years of consistent operations.
Monthly or annual revenue. Strong sales of around $5,000 to $10,000+ per month to show you can handle repayment.
Personal credit score. Many lenders check your personal credit, especially if your business is new or has no credit history.
Profitability or cash flow. Lenders want to see that your business consistently brings in more money than it pays out.
Shopify sales performance. Lenders may check your order volume and sales trends to see how stable your store is.
Business bank account. You’ll need to have a separate business bank account and provide recent bank statements to verify income, expenses and reserves.
US business entity. Most lenders require you to be legally registered and operating in the US.
How to choose the right loan for your Shopify store
Not every loan will be a fit for your Shopify store. Here’s how to determine which financing options best meet your needs:
Loan amount. Figure out your ideal funding amount and skip offers that require you to borrow extra money you don’t need.
Speed of funding. If you need cash quickly, online lenders or MCAs may be a better fit than traditional options.
Repayment flexibility. Consider whether you prefer fixed payments or repayments that adjust with your sales.
Total cost. Factor in interest rates, fees and any other costs, not just the amount you’re borrowing.
Risk tolerance. Some loans require personal guarantees or collateral, while others don’t; decide what you’re comfortable putting on the line.
Your credit and revenue. Choose a lender that works with businesses like yours, especially if your credit is not the best or your revenue is still growing.
Business goals. The right loan depends on what you’re trying to achieve; short-term fixes and long-term growth don’t require the same kind of financing.
Tips to improve your chances of approval
If you’re worried about whether your Shopify store will get approved for a loan, the good news is that there are steps you can take to improve your chances:
Keep your finances organized. Lenders want to see clear bank statements, sales reports and basic bookkeeping.
Improve your credit score. Pay down existing debt and make on-time payments to boost your personal credit score.
Maintain steady revenue. Consistent Shopify sales — even if modest — show lenders your business is active and viable.
Separate business and personal finances. Use a business bank account so lenders can easily track your income and expenses.
Register your business. Being legally incorporated (like an LLC or S-corp) can improve your credibility with lenders.
Limit recent loan applications. Multiple credit pulls in a short time can lower your score and make lenders more cautious.
Common mistakes to avoid when applying for loans for your Shopify business
To ensure a loan doesn’t end up hurting more than helping, avoid the following mistakes:
Borrowing more than you need. Just because you’re approved for a higher amount doesn’t mean you should take it. Extra debt means more interest and risk.
Not reading the fine print. Overlooking fees, repayment terms or interest rate details can lead to unpleasant surprises later.
Choosing the wrong lender. Not all lenders are a good fit for ecommerce. Look for ones that understand your business model.
Focusing only on speed. Fast cash is tempting, but quick approvals often come with high fees or strict repayment terms.
Skipping the repayment plan. Before you accept funding, make sure you understand how you’ll pay it back, especially during slower sales months.
Alternatives to business loans for Shopify businesses
Business loans aren’t the only way to fund your Shopify store. Depending on your situation, one of these alternatives might be a better fit:
Personal loan. You may qualify for a personal loan based on your credit score and income, with no business financials required.
HELOC or home equity loan. If you own a home, you may be able to borrow against your equity with a HELOC or home equity loan, often at lower rates than business loans.
Crowdfunding. Crowdfunding platforms, like Kickstarter or Indiegogo, let you raise funds from your audience without taking on debt.
Friends and family. Borrowing from family and friends can be fast and interest-free, but make sure to set clear terms to keep the relationship intact.
Grants or local funding programs. Some nonprofits and local governments offer small business grants, especially for businesses that are new or minority-owned.
Frequently asked questions
Does Shopify give you loans?
Yes, Shopify provides loans to shop owners through a program called Shopify Capital. But loans are invitation-only, so most Shopify store owners need to find alternative funding.
What are the best Shopify loan alternatives?
The best alternatives to Shopify Capital are a business line of credit, term loan and merchant cash advance (MCA). A line of credit allows you to draw money when needed and repay monthly instead of daily (as Shopify Capital requires). Business term loans offer fixed interest rates and monthly payments. An MCA is similar to Shopify Capital, charging a factor rate and considering revenue more than credit score when determining approval.
Are there loans for Shopify stores with bad credit?
Yes, some lenders offer business loans to Shopify store owners with less-than-perfect credit, but you may end up paying a higher interest rate. The best options for bad credit business loans are online lenders and MCAs.
How does Shopify financing compare to other eCommerce loan options?
Shopify financing is fast and convenient, since it’s integrated directly into your dashboard. But other lenders may offer better rates, larger funding amounts or longer repayment terms. It’s a good idea to compare all your options before deciding.
Can you get Shopify business loans without using Shopify Capital?
Yes. Many lenders offer business loans for Shopify stores. These lenders include traditional banks, online lenders and fintech platforms that specialize in eCommerce.
What can Shopify loans be used for?
Shopify loans — whether through Shopify Capital or another lender — can be used for practically any business expense, such as inventory, marketing, equipment, hiring or covering short-term cash flow gaps.
Christi Gorbett is a freelance writer with more than eight years of experience and a master's degree in English. She’s created a wide range of content for banks, financial product comparison sites, and marketing companies on topics like small business loans, credit cards, mortgages, retirement planning, lender reviews, and more.
As a former teacher, Christi excels at making complex financial topics accessible and easy to understand. Her interest in finance grew when she returned to the U.S. after living in South Korea for nearly a decade.
This shift was driven by several personal financial challenges: rebuilding her financial base after the move home, starting her own business, and catching up on retirement savings. These experiences deepened Christi’s practical understanding of finance and intensified her interest in the field.
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