Should You Use Shopify Capital to Grow Your Small Business?

11 min read
shopify website on laptop

Executive Summary

So the bottom line is: If you qualify for Shopify Capital, it’s definitely a funding option worth considering. However, know the risks and beware that the biggest loans come with the biggest daily repayment percentages. Lastly, don’t forget it never hurts to shop around and compare small business loans before making a final decision (comparing at least three is recommended).

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One of the world’s leading eCommerce platforms, Shopify, can not only help you launch an online store but can also help to fund its growth. Shopify Capital provides convenient funding to qualifying merchants for marketing, payroll, and inventory expenses.

Instead of needing to plead your case to a traditional lender and endure a drawn-out approval process, Shopify analyzes your business based on the information it already has about your store. The process is quick and easy but it won’t be the right fit for all business owners. Not all will qualify and there are a few risks and impacts that may give you pause.

Here’s a closer look at Shopify Capital and what you should know before using it to fund your eCommerce business.

Shopify Capital Funding Options

Shopify offers two funding options for qualifying borrowers — capital loans and merchant cash advances. When you visit the landing page for Shopify Capital, you may be surprised that you don’t see options for Shopify Capital loans or merchant cash advances. While those are the two types of funding that Shopify currently offers US merchants, the one you get depends on your location. It’s not an option — it’s just what’s available where you live.

Shopify Capital Loans

Shopify Capital loans are 12-month, lump-sum loans that range from $200 to $2,000,000. They are currently only available to qualifying Shopify stores in the following US states:

  • Arizona
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • North Carolina
  • South Carolina
  • Utah
  • Washington
  • Wisconsin
  • Wyoming

If you’re approved for one of these loans, it will be deposited into your business bank account. Then, a fixed percentage of your daily sales will go towards repaying the amount. Shopify will analyze your business and the risk you present to determine your loan amount and daily repayment rate.

Additionally, every 60 days, at least one-sixth of the total loan amount must be paid. If your daily sales payments don’t equal the minimum required amount when you hit one of the milestones, Shopify will deduct the difference you owe for that period from your business bank account. You can also pay more towards your loan or pay it off early without facing any penalties.

Shopify Capital Merchant Cash Advances

Shopify’s merchant cash advances are available in all of the US states that don’t offer the loans above.

Similar to the Shopify Capital loans, you can receive advances between $200 and $2,000,000 for a fixed fee. You also repay the advance by paying a fixed percentage of your daily sales over time. The rate at which you repay the advance from your sales is called the remittance rate, and Shopify will determine it based on your risk profile.

However, unlike Shopify Capital loans, you can only pay off the remaining balance once you’ve remitted at least 25% of the advance amount. Additionally, there is no timeframe or deadline for paying off the loan amount.

Shopify Capital Uses

While you won’t see Shopify Captial loans or merchant cash advances on the Shopify Capital homepage, you will find the funding broken down by the different ways you can use it, including:

  • Payroll Funding: Payroll funding can help you cover the costs of employee wages.
  • Marketing Funding: Marketing funding can help you build your brand and drive traffic to your store. This can include social media marketing (on Facebook, LinkedIn, Twitter, etc.), email marketing, blogging, paid ads, and more.
  • Inventory Funding: Inventory funding can help you buy products in bulk or prepare for an upcoming busy season.

No matter which “type” of funding you choose, it will be in the form available in your state; either a capital loan or merchant cash advance. There aren’t different loans for different purposes — they only break them down to help borrowers understand how the funding can be used. 


To qualify for Shopify Capital, your store must be in the United States, United Kingdom, or Canada. You also must be a merchant with a “low-risk” profile (determined by Shopify) using Shopify payments or third-party payment gateways. Additionally, you’ll need to process a certain amount of sales, although that number isn’t disclosed.

If you are pre-qualified, you will likely know because Shopify automatically screens all Shopify accounts to determine if they are pre-qualified for funding. If yours is, you’ll see a pre-qualified amount on the homepage of your Shopify admin dashboard and will receive an email letting you know.

Required Documents and Application Process

If Shopify Capital offers you funding, you can click “Request” under the amount you want on your Shopify Home page. From there, you’ll be able to read the terms of the application and provide the additional required details. If you want to move forward, click “Apply”.

In some cases, you might need to submit additional documents before getting approved. Shopify will request those if needed. After submitting your application and any requested documents, you should get an answer by email within two to five business days. If you’re approved, you could have the money in your bank account as soon as the next business day.

Payment Terms and Conditions

As we touched on above, the payment terms and conditions will depend on whether you get a loan or merchant cash advance. Here’s what you can expect from both options.

Capital loan

The payment terms and conditions of a Capital loan are:

  • Amounts from $200 to $2,000,000
  • 12-month terms
  • Repayment rates vary (approx. 8%-17%)
  • Fixed borrowing cost of 1.1% or 1.3% of the loan amount
  • A fixed percentage of daily sales is repaid to the loan
  • One-sixth of the loan must be repaid every 60 days

Let’s say you get a Shopify Capital loan of $10,000 with a 1.1-factor rate and a 10% daily repayment rate. Your total amount to repay would be $11,100 and Shopify would deduct 10% of the revenue you earn from your sales each day. So if you made $500 one day, you would keep $450 and Shopify would take $50.

Every 60 days, you would hit a milestone where you need to have repaid one-sixth of the loan ($1,850). If you had only repaid $1,500 during the period, the remaining $350 would be deducted from your business bank account. This setup ensures you don’t get behind and owe a large amount at the end of the term.

Merchant cash advance

Merchant cash advances have the following payment terms:

  • Amounts from $200 to $2,000,000
  • Remit rates vary (approx. 8%-17%)
  • Fixed borrowing cost of 1.1% or 1.3% of the loan amount
  • A fixed percentage of daily sales is repaid to the loan
  • No term or milestones

With a merchant cash advance, you don’t have the repayment term or the milestones. So let’s say you had borrowed the same $10,000 with the same 1.1-factor rate and 10% remittance rate. You would still owe $11,100 overall. However, if your sales were to drop, you wouldn’t have to make any milestone payments. Your remittance payments would just continue at 10% per day until the loan amount was repaid in full.

Customer Reviews

Looking at customer reviews online, there are mixed opinions about Shopify Capital.

Tyllah-Channel, CEO & Founder of Touched By Ty, has used Shopify Capital over the past three years and saw her business grow from $55k in 2019 to $100k in 2020 thanks to the funding. She was able to qualify easily and has received amounts ranging from $750 to $7,000. She did hit a rough patch once but says Shopify worked with her to settle the account with a payment plan. Another plus, she wasn’t disqualified from future funding.

Tony from the Tuned In Tony YouTube Channel is another entrepreneur who has used Shopify Capital on multiple occasions. In his review, he shares his most recent offer which includes three funding options: $13,000, $19,000, or $23,000. His repayment options were 10%, 14%, or 17% of his daily sales, respectively. He shares that he’s taken out the smallest and largest Shopify Capital options available to him in the past. He found the smallest one to be great and helpful while the daily payment on the largest one was a hindrance to his business because it absorbed too much of his cash flow. He decides on the $13,000 for his next Shopify Capital loan and recommends you carefully consider how the daily payments will impact your ongoing operations.

There’s also a heated thread of Shopify Capital customers on the Shopify support website who have run into some trouble due to the milestone requirements. When the required payments aren’t met, Shopify can cut off the administration access to your store, meaning no access to your orders. In some cases, business owners report Shopify kept the store open to customers and took all of the incoming payments. Then, when the situation didn’t get resolved, some claimed Shopify filed UCC liens against their businesses.

So while Shopify Capital can be very helpful, it’s important to choose your daily repayment amount carefully. Beyond that, be aware that you can face some damaging consequences if the terms of the business financing aren’t met.

Shopify Capital Pros & Cons Overview

Here’s a summary of Shopify Capital’s advantages and disadvantages:


  • Automatic pre-qualification: Shopify screens all merchants and notifies you if you’re pre-qualified for a funding offer.
  • Automatic repayments: You don’t have to worry about making repayments manually as they are automatically deducted from your sales each day.
  • No term on merchant cash advances: Merchant cash advances do not have terms, making them more flexible for business owners.
  • Fixed cost: The cost for the loan or merchant cash advance is fixed and 100% transparent.
  • Fixed payback percentage: The amount you pay back or remit from your future sales revenue is fixed so you know what to expect.
  • No credit checks: Shopify Capital doesn't check your credit score or lend based on your credit like bank loan providers.
  • Low cost: The costs for Shopify Capital is competitive.
  • Repeat funding: Shopify will consider you for more funding once you have paid off all or most of your current balance.


  • Only for Shopify users: If you’re not a Shopify user, you can’t get this type of funding.
  • Short term on Capital loans: Capital loans have a 12-month term and one-sixth of the loan must be paid every 60 days which can make for expensive repayments.
  • Limited eligibility: If you haven’t been pre-qualified, you simply have to wait until you get the notification.
  • Relies on steady cash flow: If your business’s cash flow declines, you may need to pay out of pocket to meet the milestones of a Shopify Capital loan.
  • Missed payments put your account at risk: If you don’t meet the terms of your funding agreement, you risk losing access to your Shopify store.
  • Reduced cash flow: The larger loan amounts come with larger daily repayment rates, which may cause cash flow problems for your business.

Our Verdict on Shopify Capital

Overall, Shopify Capital can be a helpful, streamlined funding option for small business owners who have online stores with Shopify — and it’s especially helpful if you have not-so-great credit that prevents you from getting other types of working capital.

The borrowing costs and repayment amounts are competitive, especially for the smaller loan amount offers. Further, you don’t have to worry about credit checks, lots of paperwork, or a lengthy approval process. Your qualification is based on your store’s performance so Shopify already has what it needs to make the lending decision. It also automates the repayment process so you don’t have to worry about it.

The downside is that it’s only available for a limited audience. If you are outside of the U.S., UK, or Canada, Shopify Capital won’t be an option. And for those in the qualifying area, you’ll still need to qualify based on Shopify’s standards like sales and time in business. 

Additionally, getting funding from the company that owns your eCommerce platform has definite pros and cons. While the easier qualification and automatic payments from daily sales are a plus, Shopify will have the ability to cut you off from your online store if something goes wrong which is a big disadvantage. If something were to go wrong with a loan from another lender, you would face financial consequences, but you’d more than likely be able to keep your storefront, and therefore your source of income.

So the bottom line is: If you qualify for Shopify Capital, it’s definitely a funding option worth considering. However, know the risks and beware that the biggest loans come with the biggest daily repayment percentages. Lastly, don’t forget it never hurts to shop around and compare small business loans before making a final decision (comparing at least three is recommended).

About the author

Jessica Walrack

Written by Jessica Walrack

Jessica Walrack is a personal and business finance writer who has written hundreds of articles over the past eight years about loans, insurance, banking, mortgages, credit cards, budgeting, and all things credit. Her work has appeared on Bankrate, The Simple Dollar, The Balance, MSN Money, and Supermoney, among other publications. Her love of a good number breakdown and passion for making complex concepts easy to understand makes writing about finance a natural fit.

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