Kibochi Logo

Akin Sahin

Founder

Pros and Cons of Using Shopify Capital for Your Business

Shopify Capital - Introduction

When it comes to exploring financing options for your small business, Shopify Capital is a program that offers a unique way to access funding. Understanding the ins and outs of using Shopify Capital can help you weigh the pros and cons to make an informed decision that suits your business needs.

How Shopify Capital Works

Shopify Capital - How does it work?

Shopify Capital works by providing merchants on the platform with a funding option to boost their business. This allows Shopify users to apply for a capital loan or merchant cash advance based on their Shopify store performance. The loan amount is then repaid through a percentage of your daily Shopify payments, making it a convenient way to access working capital for your business.

Qualifying for Shopify Capital

Qualifying for Shopify Capital can be a great opportunity for shopify business owners looking for business financing. To be eligible for the shopify capital program, you need to have a shopify account and meet certain eligibility criteria. Shopify will usually look at your sales revenue and credit score to determine if you qualify for shopify capital funding. If approved, you can access a percentage of your daily sales as a loan, with the advance amount being directly deducted from your shopify account. Shopify capital loans come with a fixed borrowing cost and a 12-month term, with no hidden fees. However, keep in mind that shopify capital doesn’t give you the option to choose your repayment schedule, and shopify capital won’t be available if your business doesn’t meet the required criteria.

Shopify capital is only available to shopify capital customers with a business bank account connected to their shopify admin dashboard. Once you receive the shopify capital funding, a remaining balance will be deducted from your daily sales until the loan is fully paid off. It is important to note that shopify capital may impact your cash flow, as a portion of your sales will go towards repaying the loan. Additionally, if you owe money to shopify capital, you must repay it within a certain number of business days to avoid any penalties or fees.

If you’re considering shopify capital loans or merchant cash advances, it’s essential to take a deep dive into the terms and conditions to understand the advantages and disadvantages of shopify capital. While it can provide quick and easy access to funds, it may not be the best option for every business. Make sure to assess your financial situation and goals before committing to shopify capital for your business financing needs.

Benefits of Shopify Capital

Shopify Capital - Benefits

Considering using Shopify Capital for your business can bring some significant advantages. Let’s explore how this program can help you grow and succeed.

Growing Your Business with Shopify Capital

Shopify Capital provides small business owners with the opportunity to access funds that can be crucial for expansion. Whether you need to invest in inventory, marketing, or technology upgrades, the capital loan or cash advance from Shopify can give your business the boost it needs. By having access to additional funding, you can take your business to the next level and reach new heights of success.

Customer Reviews of Shopify Capital

Many Shopify merchants who have used Shopify Capital express satisfaction with the ease of the application process and the flexibility in repayment options. Positive reviews often highlight how Shopify Capital has helped them overcome financial hurdles and achieve their business goals faster.

Shopify Capital Loan Details

Shopify Capital - Pricing breakdown

When it comes to utilizing Shopify Capital for your business, understanding the repayment options and merchant payment process is essential for successful management of the funding provided.

Repayment Options

Shopify Capital offers flexible repayment options tailored to the individual merchant’s cash flow and business needs. Merchants can repay the loan or cash advance through a percentage of their daily Shopify payments, making it a convenient and manageable way to settle the debt.

Merchant Payment Process

The merchant payment process with Shopify Capital involves seamless integration with your Shopify store. The borrowed funds are automatically deducted from your daily sales, reducing the burden of manual repayments and ensuring a streamlined process for loan repayment.

Exploring Funding Options

Shopify Capital - Funding Options

When considering funding options for your business, it’s essential to explore a variety of avenues to support your financial needs.

Working Capital Support

Working capital is the lifeblood of any business, providing the necessary funds for day-to-day operations. With adequate working capital support, you can ensure smooth business functioning and seize growth opportunities as they arise.

Various Funding Options Available

From traditional business loans to alternative financing solutions, there are various funding options available to cater to different business requirements. It’s crucial to assess the pros and cons of each option to determine the best fit for your business.

Understanding the Cons of Shopify Capital

Shopify Capital - Disadvantages

Disadvantages of Using Shopify Capital

Shopify Capital offers two types of financing options: loans and merchant cash advances. While these can provide a quick injection of funds for your e-commerce business, there are some disadvantages to using Shopify Capital. Since Shopify already processes your payments through Shopify Payments, they have access to data about your sales. This can make the approval process quick and easy, but it also means they can lend you money based on your future sales. One of the biggest drawbacks is the total cost of the funding. Shopify doesn’t offer small business loans in the traditional sense, so you won’t see an APR like you would with a bank loan. Instead, they charge a flat fee, which is a percentage of the total amount you’re approved for.

When you receive an offer from Shopify Capital, you’ll be able to see the total amount you’re approved for, as well as the one-sixth of the loan amount that Shopify will take from your future sales until the total amount is repaid. This lack of transparency can make it difficult to understand the total cost of the funding. Additionally, while the funds are typically available within 2-5 business days, the store must use the funds to grow their business – they can’t use it for personal expenses.

It’s also worth noting that Shopify Capital is not accredited by the Better Business Bureau, so some businesses may be hesitant to apply for funding through them. In conclusion, while Shopify Capital can be a convenient way to get funding to grow your business quickly, it’s important to carefully consider the terms and understand the total cost before accepting an offer.

While Shopify Capital offers unique benefits, it’s important to be aware of the potential downsides associated with this funding option. Understanding the cons can help you make an informed decision for your business.

Potential Risks and Limitations

Like any financial product, Shopify Capital comes with its set of risks and limitations. Being aware of these can help you mitigate challenges and make strategic financial decisions that align with your business goals.

Share this article
Written by

Akin Levent Sahin

Akin is the dynamic Founder and CEO of Kibochi, a company that stands at the forefront of innovation in the digital space. With over six years of extensive experience in Shopify, Akin has carved a niche in the e-commerce world.
Written by

Akin Levent Sahin

Akin is the dynamic Founder and CEO of Kibochi, a company that stands at the forefront of innovation in the digital space. With over six years of extensive experience in Shopify, Akin has carved a niche in the e-commerce world.

Continue reading

Shopify Chronicles Hub

Explore the Latest in Organic and Paid Social Media, SEO, PPC, Video Marketing, Influencer Insights, and Agency News Right Here!
Elevating Your Online Presence with Expert Shopify Strategies and Cutting-Edge Digital Marketing Solutions.
Google Partner
Shopify Partner
Kibochi Logo

Kibochi (Kibochi Ltd) | Shopify Agency | Copyright © 2024