Shopify Capital & Other Financing Options for Shopify Merchants

To take your Shopify business to the next level, you’re going to need to invest in growth. That could mean buying more inventory, testing a new product, or launching a marketing campaign. To make sure such investments are actually effective at growing your business, you want to be mindful of your cash flow so that you don’t disrupt your existing sales and growth momentum.

Posted 3 years ago by Aleksandra Cugalj

Of course, in eCommerce, cash flow can be tight — after all, you don’t get paid immediately on your sales and you have other expenses and overhead to cover. It’s no surprise then that eCommerce sellers turn to financing to help cover growth investments without impacting their already spotty cash flows. 

Fortunately, there are financing options designed for Shopify sellers and online sellers in general. In this guide, we’re going to help you understand and compare these options — from Shopify Capital to Payability’s Instant Advance for Shopify, and more — so you can make the right financing decision for your eCommerce business.

Shopify Capital

Since 2016, Shopify has offered special financing to eligible Shopify users. Here’s how their financing works:

• What It Is: Shopify users have access to a merchant cash advance and/or a business loan from Shopify Capital. Funding amounts range from $200 to $1,000,000. 
• How to Get It: Similar to how Amazon Lending works, you cannot apply directly for Shopify Capital financing — instead, Shopify assesses its users’ account health and selling history on Shopify then sends pre-qualified financing offers to businesses that meet their minimum requirements. These offers are emailed and posted to the Shopify admin homepage. If you get an offer, you will still have to apply. Fortunately, the online application is simple and does not involve a credit check. It usually takes 2-5 business days for Shopify to process your application and, if you’re approved, another two business days to get your funds.
• What It Costs & How it Works: Shopify Capital does not charge interest — instead, you’ll have to pay a fixed percentage of daily sales. So on busy sales days, your repayment amount will be higher, while slower sales days will have smaller repayment amounts. For their merchant cash advance, your repayment period is as long as it takes for the total amount plus fees to be repaid. For the loan, you’ll pay it off over a 12-month period.
• Shopify Capital Snapshot:
  • Merchant cash advances and business loans ranging from $200 – $1,000,000
  • Cannot apply directly and must be a Shopify user to get an offer
  • Simple, online application with no credit check 
  • Funding within 2-4 business days
  • No interest payments, just a fixed percentage of daily sales remitted for payback
  • No early payment benefits
  • Eligibility does not factor in other eCommerce platforms or marketplaces you also sell on.

Payability Instant Advance for Shopify

Payability is a financing company for eCommerce sellers. Their funding solutions are designed specifically for the unique needs of online sellers and are accessible to a wide range of merchants. For example, if you sell on Shopify, Amazon, Walmart, or other marketplaces and platforms, you can apply for financing — and you can connect all the eCommerce sites you sell on to get the best possible offer.

As a Shopify user, you could get up to $250,000 in as quickly as 24 hours with Payability’s Instant Advance for Shopify. Here’s how it works:

• What It Is: An advance of your future receivables, up to $250,000 (and usually about 75%-150% of a typical month of sales)
• How to Get It: Unlike Shopify Capital, you can apply for financing from Payability. Minimum requirements include nine months of selling history and $2,000 in average monthly sales. The actual application is online, only takes 10 minutes to complete, and requires zero paperwork or credit checks — and you could get a decision and funding within 24 hours.
• What it Costs & How it Works: Because Payability is not a loan company, there is no interest. You’ll be charged a flat fee — which starts at 0.50% per week — and can get a fee rebate if it’s collected early.
• Payability Snapshot:
  • Instant Advance for ShopifNo credit checks y goes up to $250,000
  • You can apply directly and get a decision in minutes with funding in as fast as 24 hours
  • Must be selling for at least 9 months and make on average $2,000 or more in sales each month
  • required
  • No origination fees
  • No hidden fees
  • Fee rebates for early collection 
  • Payability connects to top marketplaces and eCommerce platforms sites and factors in your entire selling portfolio when making their financing decisions.

How Payability & Shopify Capital Work Together

Payability’s Instant Advance for Shopify can be used alongside other funding you might have — including Shopify Capital or financing from another provider. What’s more, Payability also offers Instant Access, which gets you your marketplace payouts (i.e. Amazon) the next day, every day, after making a sale — so you can actually get paid daily and in real-time.

Take, for example, you need $20,000 for inventory or a marketing campaign. Shopify Capital offers you $10,000. You could take that offer and then use Payability to make up the difference and finally be able to invest in your business’ growth.

Other Financing Options for Shopify Sellers

Of course, Shopify Capital and Payability’s Instant Advance for Shopify aren’t the only financing options for Shopify sellers. There are a plethora of other providers that might work for your business — some tailored to eCommerce sellers and others that specialize in business financing on a broader level. Two options worth mentioning include Square Capital and Stripe Capital.

Similar to Shopify Capital, Square Capital and Stripe Capital are designed for merchants that use Square and Stripe, respectively. Pre-qualified offers are shared on an invite-only basis, applications are simple and require minimal to no paperwork, decisions and funding happen in as fast as one business day, and there are fixed repayment fees instead of interest payments.

Choosing the Right Financing Option for Your Business

To help you decide which financing option is right for your business, consider these variables:

• The number of eCommerce sites you sell on
• How much funding you need — plus when you need it
• The current state of your cash flow.

Once you have a clear picture of your eCommerce business and its financing needs, you should be able to find a financing provider that’s the right fit.

This is a guest post from Payability, a financing company designed specifically for eCommerce businesses. Payability offers a variety of financing solutions to help online sellers reclaim control of their cash flow and finally take their businesses to the next level. The following is not meant to be financial advice. We always suggest that you do your own research before making a decision for your business.

This is a guest post contribution from Vicky Sullivan. Victoria Sullivan is a Marketing Manager at Payability. She has over eight years of social media, copywriting and marketing experience. Prior to joining the Payability team, Victoria developed social media content and strategies for top technology brands such as Skype and Samsung. She holds a degree in Advertising from Syracuse University’s S.I. Newhouse School of Public Communications.