Shopify business loans review
Current merchants may be able to take advantage of a loan with extremely flexible repayments
- Best for businesses that have the sales volume to handle daily repayments.
- Pick something else if you haven't received a preapproval offer from Shopify.
|Product Name||Shopify Capital loans|
|Loan Term||1 year|
|Requirements||Low-risk profile, Shopify Payments or third-party payment provider enabled, regular sales through Shopify|
Kellye Guinan is a seasoned financial writer with over 500 articles under her belt spanning all things loans from auto to personal to business and everything in between. With four years in the field and five years of research experience, she's able to make complex personal finance decisions easier for everyday people to tackle. When she's not up to her knees learning about the latest trends in lending, she spends her time improving her own financial literacy and expertise.
Shopify Capital loans are a good choice for businesses that have already received an offer from Shopify — otherwise, your business won’t be able to request funding. Its loans have set 12-month terms and a regular repayment schedule based off your sales, making them handy for business owners who don’t want to keep up repayments every month. And while there is still a factor rate to contend with, its wide range of loan amounts mean that your business could be able to borrow the funds it needs without a complicated application process.
However, Shopify doesn’t allow merchants to request funds. If your business isn’t preapproved for a loan, you won’t be able to borrow. Shopify Capital also isn’t clear about the exact cost of borrowing. There is no list of potential factor rates or charges, and the total cost will vary based on the metrics of your business.
If you don’t have a Shopify account or don’t currently qualify for funding, compare other business loans.
How much will this loan cost me?
Shopify offers short-term business loans between $200 to $1 million. Every loan comes with a one-year term broken into 60-day repayment periods that Shopify calls milestones. Milestones come with minimum payback amounts — and payments are deducted daily from your sales.
Shopify Capital doesn't charge interest. Instead, Shopify multiples the total loan amount by a set factor rate, also known as a remittance rate. This means a loan of $10,000 with a factor rate of 10% will cost a total of $11,000.
The factor rate is applied to your daily sales to determine how much your business repays each day. The exact daily payment amount fluctuates, but it's a flexible way of repaying your loan if your business has a slow period.
How it works
Your loan amount and factor rate will be based on your business's sales volume and revenue. Because Shopify analyzes your business before making a preapproval offer, you won't be able to adjust or negotiate your loan amount — although Shopify Capital may offer you multiple financing options at one time.
What do I need to qualify?
Shopify doesn't allow its users to apply directly for funding. However, it does list a few components of what it looks for in a business before it offers a loan:
- Located in one of 14 serviced states for a loan
- Low-risk profile
- Store uses Shopify Payments or third-party payment provider
- Regularly processes high volumes of sales
What information do I need to apply?
Shopify doesn't list the information you need to have on hand when you apply. But because Shopify reviews your business before it offers funding, it may only need to confirm your business's revenue, profit and daily sales.
Check with Shopify to confirm the information your business will need to submit.
What other types of financing does Shopify offer?
Shopify Capital offers merchant cash advances to eligible businesses throughout the US and Canada. Unlike its loan, there's no set loan term.
Shopify simply collects a set percentage of your daily sales — called a remittance rate — until your full advance is repaid. And once you repay at least 25% of your advance, your business will have the option to repay the entire balance in one lump sum.
Pros and cons
Consider these factors to determine if Shopify is the right — or wrong — choice for your business.
- Wide range of loan amounts from $200 to $1 million
- No credit check
- Minimal paperwork
- Daily repayments deducted from sales
- No ability to request funding
- Loans only available to merchants in 14 states
See other top business loan options
If you aren't already using Shopify, compare our selection of lenders by selecting your annual revenue, time in business and personal credit score.
Is Shopify legit?
Yes, Shopify is a legit platform that offers short-term loans and merchant cash advances to its users. Its website is encrypted to protect your information from theft and misuse.
Shopify reviews and complaints
|BBB customer reviews||1.1 out of 5 stars, based on 73 customer reviews|
|BBB customer complaints||232 customer complaints|
|Trustpilot Score||1.4 out of 5 stars, based on 786 customer reviews|
|Customer reviews verified as of||12 October 2020|
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.
How do I apply?
If you receive a funding offer from Shopify, you can request funding by following these steps:
- Click Request for the amount your business needs.
- Enter details about your business and bank account where needed.
- Review your financing offer.
- Click Apply for offer to submit your request.
Funding offers are typically good for up to 30 days, but Shopify may change or cancel your funding offer at any time based on your business's sales and metrics. If you choose not to take a funding offer and it expires, you won't be able to request a loan or merchant cash advance — instead, Shopify will notify you if your business becomes eligible for funding again.
What happens after I apply?
Shopify processes requests within two to five business days. If approved, your business will receive its loan funds as soon as the next business day.
How do repayments work with Shopify?
Repayments are deducted from your business bank account daily — but the amount that Shopify collects is based entirely on your sales for that day. For example, if your remittance rate is 10% and your business makes $300 from sales, your daily payment will be $30. This is deducted from your remaining loan balance.
Because Shopify splits its loans into six 60-day milestones, you will need to repay a sixth of your loan every two months. If your business's daily sales don't meet the minimum payback amount, Shopify will automatically debit the remaining amount from your account.
You can choose to repay your loan early, and there are no prepayment penalties. Shopify allows you to make an extra payment of $20 or more whenever you need to. And if you're able, you can repay the loan in a single lump sum on the payment page in the settings section of your Shopify admin page.
If you don't work with Shopify or haven't been preapproved, compare more options by reading our guide to business loans.