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Shopify Capital: A Review

8th January 2024

How does Shopify Capital work? Who is eligible? And are there any alternatives? We’ll cover it all in this guide.

Approved Finance on Mobile Phone

Shopify Capital is a financing service provided by Shopify that’s specifically tailored for its merchants. It provides eligible Shopify merchants with quick access to small-business loans and cash advances to help businesses grow. 

This blog will delve into Shopify Capital, exploring how it works, who is eligible, its advantages, and disadvantages, and how the service compares to other financial solutions for ecommerce merchants. 

Ready to find out more about Shopify Capital? Keep reading on. 

Table of Contents: 

What is Shopify Capital?

Shopify Capital Logo

Shopify Capital provides financial backing for ecommerce businesses using the Shopify platform. It offers two primary types of funding: small-business loans and merchant cash advances. These are designed to help businesses scale up by investing in various areas like inventory, marketing, or infrastructure improvement. 

Small-business loans (US and Canadian merchants only)

Shopify Capital's business loan program offers loans that range from $200 to $1 million, with the specific amount a business can qualify for depending on its sales history and cash flow. The duration of these loans is typically set to 12 months.

Once the loan is finalised, the funds are transferred to the business's bank account, usually within a few business days. These funds can be utilised for various business growth activities, including marketing, inventory, operations or employee salaries. 

The repayment method for Shopify Capital's business loans involves deducting a portion of the business's daily sales. This portion, known as the remittance rate, averages around 10%, but it may vary based on the specifics of the loan agreement. Generally, 10% of daily sales revenue is used to repay the loan.

Additionally, there is a requirement to meet 60-day milestones. This means that every 60 days, a business is expected to have repaid a sixth of the total loan amount, aligning with the 12-month term of the loan. 

At the moment, Shopify Capital's small-business loans are only available to US or Canadian-based Shopify merchants. 

Merchant cash advances (US, Canadian and UK merchants)

Merchant cash advances offered by Shopify Capital, similar to their business loans, are available from $200 to $1 million. These advances are also repaid through a percentage of the business's daily sales.

The key difference between Shopify Capital's business loans and merchant cash advances lies in the repayment timeline. While business loans have a fixed repayment period of 12 months, merchant cash advances do not have a predefined repayment term. The repayment of a merchant cash advance is directly tied to the business's daily revenue. This means that on days with higher sales, the repayment amount will be larger, and on days with lower sales, the repayment will be smaller. Importantly, on days when there are no sales, no repayment is made. 

Let’s say a business secures a merchant cash advance of $10,000, with a set borrowing fee of $1,300. The total repayment required is $11,300, combining the advance and the fee. Shopify Capital arranges to withdraw 10% from the business's daily sales on Shopify, continuing until the entire $11,300 is paid back. On days with no sales through Shopify, there are no deductions made from the business's account. This flexible repayment structure aligns with the fluctuating income of a business, adapting to its daily financial situation.

The merchant cash advances service is provided to Shopify merchants through Shopify's partnership with YouLend. This service is also available to UK merchants using Shopify. 

How Does Shopify Capital Work?

You cannot directly apply for a Shopify Capital business loan or merchant cash advance. Shopify monitors seller accounts and will only send an invite once your account becomes eligible.

Only Shopify users are eligible to use Shopify Capital. The platform will notify merchants and will invite you to apply for funding. In most cases, you will receive an email informing you of your eligibility. You'll typically receive 30 days to accept an offer from Shopify Capital. After 30 days, the offer is withdrawn and you'll need to wait for Shopify to send another invitation.

After a business owner accepts Shopify's invite and selects a lending offer, Shopify’s underwriting team reviews the application and finalises the request.

Eligibility Criteria for Shopify Capital


Shopify Capital's eligibility criteria focus on the merchant's history and performance on the Shopify platform. This includes factors like sales volume, account history and the overall health of the business. Shopify reviews these aspects to determine eligibility for their financial products. Shopify sends invitations to eligible merchants based on its internal review. This process aims to target businesses that can most effectively utilise and benefit from the funding.

One major benefit of Shopify Capital's eligibility criteria is that it is not based on credit checks or previous lending history. The criteria for being accepted stems from your activity as a merchant on the Shopify platform. This gives all merchants a chance to gain funding, regardless of their current credit rating. For merchants who don't meet traditional lending requirements, this service may offer a financial lifeline. 

How Do I Keep Track of Loan Repayments?

Once you've been approved and received your funding, you can keep track of your remaining balance from the Capital tab in your Shopify Admin panel.

You'll see: 

  • Remaining balance owed
  • Amount that has already been repaid
  • Transfer history

Under the transfer history section, you'll also see each day’s sales and how much was sent to pay your Shopify capital loan.

Advantages of Shopify Capital

Here are some of Shopify Capital’s benefits: 

Quick Access to Funds

Merchants often receive funding within days, enabling swift investment into their business. 

Flexible Repayment Structure

Payments are a percentage of daily sales, offering flexibility during varying sales cycles.

Borrow Large Amounts 

Shopify Capital lets eligible merchants borrow up to $5 million. This is a considerable sum and could be utilised across several facets of a business, including paying employee salaries. 

No Extensive Credit Checks

Simplified application process without the need for in-depth credit reviews.

No Paperwork

Minimal paperwork- everything is handled 100% online. 

Supports a Range of Business Needs

Ideal for financing inventory, marketing, development, salaries, and other growth initiatives.

Automated Repayment System

Convenient deduction of repayments directly from Shopify sales, reducing manual oversight.

Disadvantages of Shopify Capital

Limited Transparency 

The specific criteria for eligibility and the calculation of borrowing costs are not fully transparent, which can be a concern for merchants seeking clarity.

Exclusivity to Shopify Merchants

Only businesses on the Shopify platform can access these financial services, limiting options for those on other ecommerce platforms.

Potential for Higher Costs

Depending on the business's sales performance, the overall cost of capital can be higher compared to traditional loans.

Reduced Profits from Sales

The repayment method, though convenient, means daily sales are automatically deducted, which could impact cash flow if not properly accounted for. 

Lack of Flexibility in Terms and Conditions

Unlike traditional loans, the terms are set by Shopify Capital and offer less room for negotiation or customisation.

Alternatives to Shopify Capital

Shopify Capital's merchant cash advance is a service provided by YouLend. YouLend extends this service via partnerships with other leading ecommerce platforms, marketplaces and payment providers. For example, ShopWired Capital is a similar service aimed at merchants using the ShopWired platform to power their online store. 

You can apply to ShopWired Capital here

Here are some of the names YouLend currently partners with to offer financial services: 

  • ShopWired
  • Amazon
  • eBay
  • Eposnow
  • Just Eat
  • Paysafe: 
  • Google

Merchants looking to adopt YouLend Capital and provide it as a service to their merchants should visit YouLend here

Different Business Funding Methods

Loan Application Form Approved

Traditional Bank Loans

Traditional bank loans are a classic option for business financing. Provided by financial institutions, they are typically suitable for established businesses with a proven track record and solid credit history. These loans offer lower interest rates and have predictable repayment schedules, making them a reliable choice for long-term financing. However, the application process can be extensive, requiring detailed financial statements and business plans. The approval process may also take time, which might not be ideal for businesses needing immediate funding.



Crowdfunding, platforms like Kickstarter being prime examples, represent a modern approach to raising capital. This method involves soliciting small amounts of money from a large, usually online, audience. It's particularly suitable for startups and new ventures with innovative or compelling project ideas. Crowdfunding not only provides funding but also helps in validating the business idea through public interest. The downside is its competitive nature and the fact that funding isn't guaranteed. Success often depends on the ability to effectively market the idea and engage potential backers.

There are plenty of crowdfunding platforms online, with Indiegogo, Kickstarter, GoFundMe and Patreon being some of the most popular. 

Small Business Grants 

Small business grants are ideal for specific types of projects, especially those with a social, technological, or research focus. These grants are funds that do not require repayment, provided by government entities, private corporations, or foundations. While this is an attractive option due to the lack of repayment obligations, obtaining a grant can be highly competitive. Applicants typically need to meet stringent criteria and go through an intensive proposal process, making it a challenging but potentially rewarding funding route.

Business Line of Credit

A business line of credit offers a flexible financing solution. It works like a credit card for a business, providing access to a set amount of funds that can be drawn upon as needed. This option is ideal for managing cash flow, dealing with unexpected expenses, or capitalising on timely opportunities. The major advantage is paying interest only on the amount used. However, lines of credit may have higher interest rates compared to traditional loans and usually require a good credit history to qualify. This flexibility makes it a valuable tool for businesses with fluctuating funding needs.

Shopify Capital Review- The Verdict

Shopify Capital offers a streamlined and accessible funding solution tailored for Shopify merchants. Its quick access to funds, flexible repayment terms based on sales, and substantial borrowing limits cater well to the dynamic needs of growing online businesses. Especially for those experiencing rapid growth or facing seasonal sales fluctuations, this can be a significant advantage. The ability to borrow up to $5 million can also be a game-changer for larger-scale expansion plans.

However, there are limitations to using Shopify Capital. The service’s exclusivity to Shopify merchants and the lack of transparency in eligibility criteria could be seen as drawbacks. Additionally, the potential higher costs compared to traditional loans, and the automatic deduction of sales, might not align with every business’s financial strategy. While Shopify Capital presents an innovative and tailored financing solution, merchants need to weigh its features against their specific business needs and the offerings available on their own platform. 

For those outside the Shopify ecosystem or seeking alternatives, there are other financing options. From platform-specific options like ShopWired Capital to traditional bank loans, crowdfunding, small business grants, and business lines of credit, these options also present viable alternatives.

Ultimately, the choice of financing should align with the specific needs, circumstances, and growth trajectory of your ecommerce business. A careful evaluation of the pros and cons of each option, along with a clear understanding of your business's financial health and goals, will guide you in selecting the most beneficial funding solution. 

Shopify Capital- Frequently Asked Questions

1. What is Shopify Capital?

Shopify Capital is a financing program by Shopify, offering small-business loans and merchant cash advances to eligible Shopify merchants. This program is designed to help these businesses grow by providing quick access to funding.

2. Who is eligible for Shopify Capital?

Shopify Capital is only available for merchants using Shopify. Eligibility is based on meeting Shopify's criteria, which include a merchant's sales volume, account history, and overall business health on the Shopify platform. Shopify proactively invites eligible merchants based on these criteria.

3. How does the application process for Shopify Capital work?

Merchants cannot directly apply for Shopify Capital. Instead, Shopify monitors merchant accounts and sends invitations to eligible merchants. Once an invite is received, merchants can choose a lending offer and undergo a review process by Shopify’s underwriting team.

4. What types of funding does Shopify Capital offer?

Shopify Capital provides two main types of funding: small-business loans (available only to US and Canadian merchants) and merchant cash advances (available to US, Canadian and UK merchants).

5. How are Shopify Capital funds repaid?

Repayment of Shopify Capital funds is done through a deduction of a fixed percentage of the merchant's daily sales on Shopify. This allows for flexible repayment aligned with the business's sales performance.

6. Are there any specific uses for Shopify Capital funds?

Funds from Shopify Capital can be used for a variety of business needs, including inventory procurement, marketing efforts, expanding product lines, or hiring staff.

7. What are the advantages of using Shopify Capital?

Advantages include quick access to funds, flexible repayment structure, the ability to borrow large amounts (up to $5 million), no extensive credit checks, minimal paperwork, and support for a range of business needs.

8. What are some alternatives to Shopify Capital?

Alternatives include services provided by YouLend in partnership with other ecommerce platforms. For example, ShopWired Capital is a similar service offered by ShopWired. Traditional bank loans, crowdfunding, small business grants, and business lines of credit are other viable options.