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.
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.
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 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.
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.
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 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.
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.
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.
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.
We currently don't have that product, but here are others to consider:
How we picked theseThe Finder Score crunches 12+ types of business loans across 35+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best business loans for startups loans, you can see how each business loan stacks up against other business loans with the same borrower type, rate type and repayment type.
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:
Not every loan will be a fit for your Shopify store. Here’s how to determine which financing options best meet your needs:
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:
To ensure a loan doesn’t end up hurting more than helping, avoid the following mistakes:
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:
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.
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.
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.
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.
Yes. Many lenders offer business loans for Shopify stores. These lenders include traditional banks, online lenders and fintech platforms that specialize in eCommerce.
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.
High-dollar financing with competitive rates tailored to your specific industry.
Think you need a cosigner for your business loan? Learn when they help — and when they don’t.
Lenders won’t reject you outright if you don’t have the best score.
A review of QuickBooks Capital, which offers business loans up to $200,000 to companies that use the QuickBooks accounting software.
Compare financing options for your construction company.
Invoice financing can help your business meet immediate cash flow needs based on your unpaid invoices.
Invoice factoring allows businesses to sell their invoices at a discount to fill cash flow gaps.
Compare lenders that offer fast, no-doc business lines of credit, MCAs, invoice factoring, short-term loans and more for LLC businesses.
Learn about business loan interest rates and which business loans have the highest and lowest rates.
Where to get a business loan in Florida and how to qualify.