Shopify Capital Review – Working Capital Loan [2021]

Bucky Wucky Finance > Business Loans > Shopify Capital Review – Working Capital Loan [2021]
Shopify Capital Review

Bucky Wucky does have sponsors, and we may work with companies to provide you with the best content, information, and data on business and personal finance. Some links on our site may be affiliate links. While our sponsors may pay us, we only work with companies that align with Bucky Wucky’s values.

Shopify Capital Review

Shopify Capital Review

What is Shopify Capital? While most people have heard of Shopify, many are not aware that the popular e-commerce platform also offers low-cost business financing solutions via Shopify Capital. Depending on your current situation, Shopify Capital may be a great fit for your company’s working capital needs. 

Shopify Capital was introduced in 2016 and operates similarly to PayPal Working Capital. Like PayPal Working Capital, Shopify Capital already has its users’ relevant sales and turnover data, which makes the application process faster than most traditional lenders. While it has plans for expansion, at the moment Shopify Capital offers short-term loans and cash advances. Additionally, it is important to note that only companies and individuals currently using the Shopify e-commerce platform are eligible for these Shopify Capital services.

Onto our Shopify Capital review!

Shopify Capital Funding – Services Offered

  • Short term cash loans
  • Merchant cash advances (working capital loans)

Shopify Capital Loan Eligibility

US businesses located in the following states are eligible for a Shopify Capital Loan:

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

Shopify Capital is now also available in Canada

Shopify Capital Merchant Cash Advance Eligibility

Available in all US states:

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming

Shopify Capital Approval

Can anyone apply for a Shopify Capital loan? No, merchants are offered funding from Shopify Capital if they meet their requirements and eligibility. You cannot apply for a loan without an invitation from Shopify.

Shopify Capital Requirements

In order to be eligible for Shopify Capital services, a business must be located in the United States, have Shopify payments enabled, have a low-risk profile, and must have a certain amount of gross merchandise volume.

Shopify Capital Loan

Short Term Cash Loans

Short term cash loans are like cash installment loans. They do not carry interest rates instead they carry a factor rate. For example, Shopify Capital uses a factor rate of 1.1 or 1.13.

If you borrow $1000 at the factor rate of 1.1 then you will have to repay $1100. Shopify short term loans carry 60-day repayment milestones. This means customers will be issued a 60-day milestone which they will have to meet.

Each short-term cash loan will need to be repaid within 12 months. Each 60-day milestone will require the borrower to repay 1/6th of the total loan.

Merchant Cash Advances

Merchant Cash Advance (Shopify Working Capital Loan)

A merchant cash advance (MCA) is not a type of loan; instead, it is an advance of cash against future revenue, or what is commonly referred to as a working capital loan.

Therefore, instead of taking a loan and becoming a debtor, the business that takes out the MCA essentially sells its future revenue to the borrower at a discount.

MCA’s carry a factor rate instead of an interest rate. In order to collect your payments, Shopify Capital will deduct a predetermined amount from your revenue each day.

Shopify MCA’s do not have any repayment date or term limit per se.  Instead, the repayment will fluctuate daily, as it is attached to the borrower’s cash flow.

Their withholding rate (also known as remittance rate) starts at 10%, which means 10% of daily revenue will be deducted every day against the MCA. However, in some cases the withholding or remittance rates vary, since it is based on the amount of cash flow.

Shopify Capital Loan

Shopify Capital Eligibility Review

How to get Shopify Capital? Unlike other online lenders, Shopify Capital does not require borrowers to have a certain threshold of revenue or profitability. Instead, Shopify Capital assesses the cash flow of the borrowers to determine their eligibility for loans or MCAs.

If a Shopify user is eligible, Shopify will notify that user via email and in the Shopify dashboard. However, outside of this automated predetermination system, there is no other way to apply for Shopify Working Capital.

Shopify Capital Eligibility
Shopify Capital Eligibility

How Does Shopify Capital Work?

Application And Approval Process

As stated previously, Shopify Capital does not have an active application process like other lending platforms. Instead, Shopify’s automated system monitors the merchant’s Shopify account, and if they meet the eligibility criteria then a notification is sent to the business/user. The notification will provide different lending options for the businesses to choose from. 

Once a Shopify user selects a lending option, underwriters will get involved in the process and carry out a soft check on your eligibility. At this point, some prospective borrowers may be notified that they are not eligible at all, or not eligible for the presented offers. In the former case the user will be notified that they are no longer eligible, while in the case of the latter the user will be offered different lending packages.

Shopify DOES NOT perform a credit check at any point in this process, and there will be no changes at all to your credit score as a result of interacting with Shopify Capital.

If your business is eligible for the selected lending package and accepts the Shopify Capital agreement, the funds will be transferred to the user’s bank account within 2-5 working days.

Shopify Working Capital
Shopify Working Capital

Terms & Rates

Borrowers or customers of Shopify must keep in mind that although Shopify does not apply any annual percentage rate (APR), it is a good idea to carry out your due diligence before taking any offer as it has been seen that in some cases the offers from Shopify can sometimes be more costly as compared to the market.

Shopify Capital Rates

  • Borrowing limits: $400 – $500,000
  • Term Length of 12 months or less for short term cash loans
  • No maturity date for MCA
  • Factor Rate: 1.1 or 1.13
  • Origination Fee: N/A
  • Collateral: N/A

Customer Service 

Shopify Capital provides customer service through the following mediums of communication

  • Phone (available 24/7)
  • Email
  • Live Chat

Our research indicated that while most customers expressed satisfaction after their experience with Shopify Capital customer service, many other customers were left disappointed after their experience.

Most unsatisfied customers complained that the representatives have a one size fits all approach, which could indicate that the customer service staff is either not trained properly or does not have enough experience to interact with the customers in an appropriate manner.

Shopify Capital Phone Number

North America: 1-855-816-3857

Shopify Capital Funding
Shopify Capital Funding

Shopify Capital Reviews

Merchant Cash Advances & Shopify Loan Reviews

Overall, customer reviews for Shopify Capital are not very encouraging. Many customers have expressed disappointment and confusion with Shopify Capital, and it appears that its terms of service are not clearly understood by many of its customers. This could indicate a failure on the part of Shopify Capital to clearly explain its products  Many commentators have also expressed concerns that since Shopify Capital is relatively new and since their financing and lending products differ considerably from other online lenders, there is a need to better explain the products and offers to the customers more clearly. 

Additionally, some borrowers have complained that the cost of borrowing from Shopify is too high, especially when compared to other lenders. However, customers who gave Shopify Capital positive feedback have praised the speed of the application process and rapid access to funding, and have indicated that the ease of transactions is worth the higher cost. Additionally, many reviewers appreciate the fact that Shopify does not require a credit check as well.

Pros and Cons

Pros:

  • Fast and efficient application process
  • No need to keep track of payments
  • No minimum credit score or credit check required

Cons:

  • Only available to Shopify users
  • More costly than other loan alternatives
  • Limited borrowing options
  • Low funding amounts narrowly aimed at small businesses

Shopify Capital Second Loan

When you remit (payback) 85% of your Shopify Capital balance you will be reviewed for more funding.

Shopify Capital Second Loan
Shopify Capital Second Loan

Shopify Capital United Kingdom – powered by YouLend 

If you run a business in the UK and you are looking for funds to grow your company, you might be eligible for a cash advance from YouLend, a Shopify Capital partner.

Shopify Capital Review: Is Shopify Capital a Good Fit for You?

Is Shopify Capital a good idea? If you are a Shopify user and you have been sent a notification stating you are eligible for Shopify Capital then you should weigh your options and carry out due diligence before accepting. Many users state that Shopify Capital loans are easy and convenient, so if you do not have much time to shop for a different loan this could be a great option. While the cost of Shopify Capital’s lending services may be a bit higher than other options, many past customers believe the ease of the transactions makes up for the higher cost. 

Head To Shopify

Get started today.

Enjoy our Shopify Capital review?

You may also be interested in Plastiq: Pay Bills Using Your Credit Card.

Newsletter

Join our mailing list!

Apply For A Clearbanc Business Loan

Bucky Wucky does have sponsors, and we may work with companies to provide you with the best content, information, and data on business and personal finance. Some links on our site may be affiliate links. While our sponsors may pay us, we only work with companies that align with Bucky Wucky’s values.

Bucky Wucky Finance > Business Loans > Shopify Capital Review – Working Capital Loan [2021]

Shopify Capital Review

Shopify Working Capital Loan Review

You may have heard of Shopify, it is one of the best shopping carts that are available in the market today. What many people are not aware of is that Shopify also offers low cost business financing solutions.

Shopify Capital was introduced in 2016. It can be considered as an online lending platform similar to Paypal Working Capital. However compared to Paypal Working Capital, Shopify Capital is a lot faster as their system already has all the relevant user data, this makes their application process not only faster but also cheaper but this also means that Shopify Capital is only for those who are on Shopify and thus it is not a traditional online lender.

It however is still in its infancy and is generating market traction. Shopify has plans to expand their services but at the moment they only offer limited offers at market competitive rates and provides low cost short term loans and cash advances, this means that its target market is fairly narrow.

Shopify Loan Options

services offered

  • Short Term Cash Loans
  • Merchant Cash Advances

Short Term Cash Loans

Short term cash loans are like cash installment loans. They do not carry interest rates instead they carry a factor rate. For example Shopify Capital uses a factor rate of 1.1 or 1.13. If you borrow $1000 at the factor rate of 1.1 then you will have to repay $1100. Shopify short term loans carry 60 day repayment milestones. This means that customers will be issued a 60 day milestone which they will have to meet.

The short term cash loans will have to be repaid within 12 months. Each 60 day milestone will require the borrower to repay 1/6th of the total loan. 

Merchant Cash Advance

A merchant cash advance (MCA) is not a type of loan instead it is an advance of cash against future revenue. Therefore instead of taking a loan and becoming a debtor, the business that takes out the MCA essentially sells their future revenue to the borrower at a discount.

MCA`s carry a factor rate instead of an interest rate (explained above). In order to collect your payments, Shopify will deduct a pre determined amount form your revenue every day. Shopify MCA`s do not have any repayment date or term limit, instead the repayment will fluctuate daily as it is attached with the borrowers cash flow. Their withholding rate (also known as remittance rate) is 10% which means that 10% of daily revenue will be deducted daily against the MCA. Although in some cases the withholding or remittance rate may be different because it is based on the amount of cash flow.

Eligibility Requirements

Unlike other online lenders, Shopify Capital does not require borrowers to have a certain amount of revenue or profitability. Instead Shopify Capital assess the cash flow of the borrowers to assess their eligibility, if eligible Shopify will notify you, this means that there is no way to actually apply for the borrowing facility. Shopify automatically notifies the eligible borrowers upon meeting the eligibility criteria.

In order to be eligible, the business must be situated in the United States, have Shopify payments enabled, have a low risk profile and must have a certain amount of gross merchandise volume.

Application Process

As stated above, Shopify capital does not have any active application process per se like other lending platforms. Instead the automated system monitors the users and if they meet the eligibility criteria then Shopify will send a notification to the business/user.

The notification will present users with different packages that the users may be interested in. After choosing the package or offer, the human under writers will get involved in the process and they will carry out a soft check on your eligibility. It may be possible that the human under writers may find out that the notified user is either not eligible at all or not eligible for the presented offers. In the former case the user will be notified that they are no longer eligible and in the case of the latter the user will be offered different packages.

After successfully choosing the package, the funds will be transferred to the users bank account. The transfer may take between 2-5 working days.

Business Information

Our Trading helps clients run and transform their front, middle and back-office trading operations. We provide buy-side, sell-side and market infrastructure firms with a full-service offering, including systems integration and technology consulting services, to assist in delivering high performance trading and settlement capabilities across all asset classes. This includes strategy, architecture design, operating model work, process improvement, systems building and trading p

Key Analyze

Our Trading helps clients run and transform their front, middle and back-office trading operations. We provide buy-side, sell-side and market infrastructure firms with a full-service offering, including systems integration and technology consulting services, to assist in delivering high performance trading and settlement capabilities across all asset classes. This includes strategy, architecture design, operating model work, process improvement, systems building and trading p

Our Workflow & Process

Our Trading helps clients run and transform their front, middle and back-office trading operations. We provide buy-side, sell-side and market infrastructure firms with a full-service offering, including systems integration and technology consulting services, to assist in delivering high performance trading and settlement capabilities across all asset classes. This includes strategy, architecture design, operating model work, process improvement, systems building and trading p

term rates

Borrowers or customers of Shopify must keep in mind that although Shopify does not apply any annual percentage rate (APR), it will be better to carry out due diligence before taking any offer as it has been seen that in some cases the offers of Shopify end to be costly as compared to the market.

Borrowing limits:

$400 – $500,000

Term Length:

  • 12 months or less for short term cash loans
  • No maturity date for MCA

Factor Rate:

1.1 or 1.13

Origination Fee:

N/A

Collateral:

N/A

Customer Service

Shopify Capital provides customer service through the following mediums of communication

  • Phone (available 24/7)
  • Email
  • Live Chat

Our review has shown us that customer reviews on the customer service of Shopify Capital are quite diverse in nature. While many customers expressed satisfaction after their experience with Shopify Capital customer service, there were many such customers who were left disappointed after their experience. Most customers who were not satisfied complained that the representatives have a one size fits all approach. This possibly means that the customer service staff is either not trained properly or does not have enough experience to interact with the customers in an appropriate manner.

user reviews

Customer reviews for Shopify Capital are not very encouraging to be honest; some customers express their disappointment and confusion because perhaps there is a failure from the side of Shopify Capital to explain their products to their customers properly.

Commentators have expressed concerns that since Shopify Capital is relatively new and offers financing that is different from other online lenders there is a need to explain the products and offers to the customers.

Some borrowers complain that the cost of borrowing from Shopify is too high as compared to other lenders. However customers who gave positive feedback insisted that the quick flawless service is worth the high cost as this service saves them the time and trouble of gong to a bank for a loan, not to mention the paperwork that comes with a bank. With Shopify, eligible users can get a loan with a few clicks.

PROS

Fast and efficient application process

No need to keep track of repayments

No minimum credit score required

No credit check on merchant advance

CONS

A bit on the expensive side

Limited borrowing options

Aimed at small businesses

Only for Shopify users

conclusion

If you are a Shopify user and you have been sent a notification that you are eligible for Shopify Capital then you should weigh your options and carry out due diligence before moving on. Many users state that it is easy and convenient, if you like them prefer ease and convenience then you may go for it. The cost of loans or MCA`s may be a bit higher than the market but the ease and accessibility perhaps covers up for the slightly higher cost.

If however, cost for you is an issue then you may look for other options in the market that may require credit checks and other stringent eligibility requirements but they may offer lower rates compared to Shopify. Therefore in the end it comes down to what you as a business owner and user prefer for your business.

Our Services

GET THE BROCHURE Download the pdf file of latest update for this service.

Need Help ?

Please feel free to contact us. We will get back to you with 1-2 business days. Or just call us now

+1-3454-5678-77
Sales@GoodLayers.com

Get A Quote

Share This