How Shopify Capital Works: A Complete Guide
1. Understanding Shopify Capital Eligibility and Offer
1.1 Check Your Shopify Admin for Invitations
Shopify Capital operates on an invitation-only basis. To determine if you are eligible for an offer, log in to your Shopify admin panel. Navigate to the “Finances” section, and then look for “Capital.” If you have an offer, it will be prominently displayed here. Shopify assesses eligibility based on your store’s sales history, specifically looking for consistent revenue and a minimum sales volume over a period of time, typically several months. There isn’t a public application form; offers are extended proactively by Shopify based on an algorithm.
1.2 Review Your Capital Offer Details
Once you locate an offer, carefully examine its components. An offer from Shopify Capital will typically include three key figures: the principal amount you can receive, the total amount to be repaid (which includes a fixed capital fee), and the remittance rate. The remittance rate is the percentage of your daily sales that will be automatically deducted for repayment. For example, an offer might be for $10,000, with a total repayment of $11,300 and a 10% remittance rate. This means for every $100 you make in sales, $10 will go towards repayment until the $11,300 is fully remitted.
2. Accepting Your Shopify Capital Offer
2.1 Navigate to the Capital Section in Shopify Admin
To accept an offer, return to the “Finances” > “Capital” section in your Shopify admin. If you have an active offer, you will see a prominent button, usually labeled “View offer” or “Accept offer.” Click on this button to proceed to the offer details page where you can review everything one last time before committing.
2.2 Understand the Terms and Conditions
Before clicking “Accept,” it is crucial to thoroughly read and understand the full terms and conditions associated with the Shopify Capital advance. Pay close attention to the total repayment amount, the daily remittance rate, and any clauses regarding minimum payments or what happens if your sales fluctuate significantly. While Shopify Capital is not a loan in the traditional sense (it’s a merchant cash advance), understanding the repayment structure and your obligations is vital. Ensure you are comfortable with the fixed capital fee and how it impacts the total amount you will repay.
3. Receiving and Utilizing Your Funds
3.1 Expect Funds Within 2-5 Business Days
Once you accept the offer, Shopify Capital typically deposits the funds directly into the bank account linked to your Shopify store within 2 to 5 business days. This timeframe can vary slightly depending on your bank’s processing times. You will receive a confirmation email from Shopify once the funds have been disbursed. It’s advisable to check your bank account statement after this period to confirm receipt.
3.2 Strategically Invest Your Capital
Shopify Capital is designed to help your business grow. Therefore, it’s essential to have a clear plan for how you will invest the funds. Common uses include purchasing additional inventory to meet demand, launching new marketing campaigns to acquire more customers, upgrading equipment, or hiring more staff. Avoid using the capital for non-business expenses or for purposes that do not directly contribute to your store’s revenue generation, as this could make repayment more challenging.
4. Repaying Your Shopify Capital Advance
4.1 Automatic Deductions from Daily Sales
Repayment of your Shopify Capital advance is automatic and tied directly to your daily sales. Each day your store makes sales, Shopify will automatically deduct the agreed-upon remittance rate percentage from those sales. For instance, if your remittance rate is 10% and you make $500 in sales today, $50 will be automatically applied towards your repayment. This continues daily until the total agreed-upon repayment amount (principal + capital fee) is fully remitted. There are no fixed monthly payments, only deductions based on your sales.
4.2 Monitor Your Repayment Progress
You can easily track your repayment progress within your Shopify admin. Navigate back to the “Finances” > “Capital” section. Here, you will find a dashboard that shows the original advance amount, the total amount repaid so far, and the remaining balance. This dashboard updates regularly, allowing you to see how much you have remitted and how much is left to repay. Regularly monitoring this helps you understand your financial position and plan accordingly.
FAQs
Is Shopify Capital a loan?
No, Shopify Capital is not a traditional loan. It’s a merchant cash advance (MCA). Instead of interest, you pay a fixed capital fee on the advance. Repayment is based on a percentage of your daily sales, rather than fixed monthly installments, which distinguishes it from a conventional loan.
What if my sales are low on a particular day?
If your sales are low on a given day, the amount remitted will also be low, as it’s a percentage of your daily sales. On days with no sales, no remittance occurs. This flexible repayment structure is a key feature of Shopify Capital, as it adapts to your business’s fluctuating revenue.
Can I repay my Shopify Capital advance early?
Yes, you can make additional one-time payments to repay your Shopify Capital advance faster. To do this, go to the “Finances” > “Capital” section in your Shopify admin, and look for an option to “Make a payment” or “Pay off advance.” While you can pay early, the total fixed capital fee remains the same regardless of how quickly you repay.
Does Shopify Capital affect my credit score?
Shopify Capital does not typically perform a hard credit check when determining eligibility, so applying or receiving an advance usually won’t directly impact your personal credit score. Similarly, repayment activity is generally not reported to major credit bureaus. However, consistent and significant defaults could potentially lead to collection efforts that might indirectly affect your financial standing.
