Shopify Loan: How It Works and What You Should Watch For

Struggling to grow your online store but short on funds? A Shopify loan might seem like the perfect solution—fast, simple, and designed for Shopify merchants. But before accepting any offer, it’s important to understand how it works, who qualifies, and how it compares to other funding options. This guide walks you through everything you need to know. Read carefully to decide if a Shopify loan is right for your business.

What Is a Shopify Loan?

Shopify loan refers to financing offered through Shopify Capital. It delivers a lump‑sum payment to eligible merchants in the U.S., Canada, the UK, and Australia. The merchant receives funds based on sales history and risk profile, without traditional credit checks or collateral.

Repayment happens automatically as a fixed percentage of daily Shopify sales until the total payment amount, loan plus fixed borrowing fee, is fully repaid.

The repayment schedule adapts to sales volume, reducing the burden during slower periods. This makes a Shopify loan a flexible funding tool for store operations or growth plans.

Types of Loans Offered Through Shopify Capital

Shopify Capital offers two main financing options. Each serves different business needs and comes with unique repayment methods.

Merchant Cash Advance (MCA)

A Merchant Cash Advance provides an upfront cash amount, repaid with a set fee based on a factor rate. Repayments occur via a set percentage of daily sales, deducted automatically. When sales rise, payments rise. When sales dip, payments fall. No fixed term applies; repayment ends when the total amount owed is collected.

This option requires no credit check. Shopify evaluates store performance and account health only, not personal credit.

Shopify Term Loans

Term loans offer a lump sum plus a fixed borrowing cost, clearly defined in advance. Repayments are a percentage of daily sales. Two plans exist:

• Fixed‑fee structure: a one-time fee based on a factor rate. The cost stays the same regardless of how fast the loan is paid.

• Monthly‑fee structure: fixed monthly fee plus remittance from sales. Minimum repayments are due every 60 days (one‑sixth of the total) to ensure full repayment within ~12 months. Term loans come with a maximum repayment period of 18 months. Shopify applies automatic daily deductions and may require manual payments if milestones are missed.

Who Qualifies for a Shopify Loan?

Eligibility depends on meeting key criteria tied to business performance and platform use.

Qualified businesses typically include:

• Active Shopify Merchant: Must have an active paid Shopify plan. The store should be operational for at least 90 days or have made its first sale over three months ago.

• Sales Performance and Store Health: Must show consistent sales, low chargebacks, minimal disputes, and good customer engagement.

• Compliance with Shopify Policies: Must follow Shopify’s Terms of Service. Stores selling prohibited items or under track record violations become ineligible.

• Supported Location and Currency: Must operate in the US, Canada, UK, or Australia. The store currency and bank account must match the business location.

• Use Shopify Payments or an approved gateway: The merchant must use Shopify Payments or an authorized third-party provider. The currency must match the country of operation.

Shopify does not allow direct loan applications. System algorithms assess eligibility. Qualified merchants receive a message in their Shopify admin dashboard or via email. Store owners must review and apply if an offer appears.

Pros and Cons of Using a Shopify Loan

Before applying for the Shopify business loan, you should understand its benefits and drawbacks.

Pros

• Fast funding and simple process: Approval and funding happen in a few business days. No credit check or heavy paperwork is required.

• Repayment adapts to sales: Shopify deducts a percentage of daily sales. Payments are lower on slow days and higher on busy days.

• Clear, fixed borrowing cost: A fixed interest rate sets a total repayment amount. No compounding interest surprises.

• All managed in the Shopify dashboard: Funding status, balance, and repayment tracking happen in one place.

Cons

• Cost often higher than bank loans: Factor rates translate into high effective APRs compared with traditional business loans.

• Limited transparency on eligibility: Eligibility criteria remain unclear. Offers arrive by invitation only.

• Cash flow impact on strong sales days: A fixed remittance rate can drain revenue on high-volume days.

• Strict milestone payments for loans: Some term loans require repaying one‑sixth every 60 days. Falling short can trigger automatic withdrawals or other penalties.

How Does a Shopify Loan Work?

The Shopify loan works through a transparent, streamlined process:

Step 1: Automatic eligibility review

Shopify checks store history, sales, disputes, and compliance automatically. Offers appear if the store meets the criteria.

Step 2: Receive and view offers

Merchants receive financing offers through the Shopify admin dashboard under Finance → Capital. Offers cannot be requested manually.

Step 3: Select an offer and accept

Choose a fixed‑fee or monthly‑fee plan. Review the total repayment cost and factor rate before confirming.

Step 4: Fund disbursement

Approved offers deposit funds into the business bank account, usually within 1–3 business days

Step 5: Repay via daily sales percentage

For most loans and MCAs, Shopify deducts a fixed percentage of daily Shopify sales. Payment adapts to sales volume.

Step 6: Meet minimum repayment milestones

Must repay at least 30% of the total by 6 months and 60% by 12 months. Full repayment must occur within 18 months.

Step 7: Track repayment and financial status

The dashboard provides up-to-date information on how much is owed, what’s been paid, and how far along repayment is.

Shopify Loan Amounts and Fees

Shopify Capital provides funding ranging from $200 to more than $1 million, depending on a store’s sales performance and cash flow. Borrowing costs are set by a factor rate, typically 1.10–1.13.

If you borrow $10,000 with a factor rate of 1.10, the total repayment would be $11,000. The fee is fixed and does not change with repayment pace.

Repayments come from a fixed percentage of daily Shopify sales, often around 10%, until the total is repaid. Term loans usually must be repaid within 12 months, though the maximum window can extend to 18 months for larger offers.

Shopify Loan vs Other E-commerce Business Loans

Shopify Capital vs Traditional Bank Loans

Approval and Eligibility

• Shopify Capital: Pre‑qualified invitations based on Shopify sales and account health. No credit checks.

• Bank Loans: Require business plans, revenue proof, collateral, and strong credit.

Repayment Structure

• Shopify Capital: Fixed fee deducted as a percentage of daily Shopify sales.

• Bank Loans: Fixed monthly or quarterly payments with interest and principal.

Funding Speed

• Shopify Capital: Funds arrive within 1–3 business days after acceptance.

• Bank Loans: Approval and funding can take several weeks.

Cost and Flexibility

• Shopify Capital: Transparent fixed cost. No early‑repayment penalties for MCA.

• Bank Loans: Lower APR, but early payoffs may incur fees. Collateral often required.

Shopify Capital vs PayPal Working Capital

Platform Focus

• Shopify Capital: Only for Shopify store owners.

• PayPal Working Capital: Available to PayPal merchants across platforms.

Repayment Method

• Shopify Capital: Offers Merchant Cash Advances or term loans with daily or milestone deductions.

• PayPal: Purely sales‑based, with flexible pay‑back percentages (5–30%), and no fixed term.

Loan Size

• Shopify Capital: Up to $1 million or more based on store performance.

• PayPal Capital: Up to 35% of annual PayPal sales, capped typically at $150K first loan, $300K later.

Costs and Flexibility

• Shopify Capital: Fixed fee, predictable, but less flexible for slow seasons.

• PayPal: Flat fee model with faster payoff at higher daily percentages and no early‑repay penalties.

Examples of Shopify Merchants Who Used Shopify Loans

These success stories showcase how real Shopify merchants leveraged Shopify Capital to scale operations quickly and efficiently.

Polar Monkeys

Polar Monkeys is a wellness brand focused on high-performance cold plunges that pair innovation with artist-inspired designs. The team tapped Shopify Capital to fund rapid growth and expand their product offerings. Within three years, the brand scaled to millions in revenue and solidified its position as a leader in cold therapy, serving professional athletes and commercial facilities alike.

The Shop

Founded in Bend, Oregon, in 2021, The Shop serves forestry professionals and enthusiasts with premium gear. Shopify Capital helped the founders stock high-cost items like $400 fire pants and build their branded product line. This support enabled The Shop to evolve into a physical destination and launch cutting-edge, locally made products.

Eqpd

eqpd is a small-town American brand that makes durable, everyday bags from rugged dry-bag fabric. Shopify Capital helped finance inventory and production. This funding allowed eqpd to focus on quality and sustainability. As a result, the brand now enjoys a remarkable 37% repeat customer rate.

Alternatives to Shopify Loans

Exploring alternatives helps Shopify merchants find flexible funding paths beyond Shopify Capital. These options suit different needs and business stages.

Payability

Payability serves as a popular alternative to Shopify Capital. The platform advances up to 80% of daily sales, so funding arrives quickly without waiting for sales cycles to conclude. No credit check is needed; approval relies on past sales history. The fee structure is based on a set portion of sales rather than interest charges.

Pros:

• Fast funding—cash may arrive within a day

• No impact on personal credit score risk

• Transparent fee structure

OnDeck

OnDeck provides access to short-term loans as well as adaptable revolving lines of credit. Loan sizes typically range from $5,000 to $250,000. Approval criteria include at least one year in business, a business bank account, $100K+ annual revenue, and a personal FICO score of 625+. Repayment occurs via structured monthly or weekly fixed payments.

Pros:

• Predictable monthly instalments instead of sales‑based deductions

• Funding possible on the same day of approval

Clearco

Clearco offers revenue‑share financing that covers invoices, inventory, ads, or receipts. Funding ranges from $10,000 up to $10 million. No collateral or personal guarantees required. Repayment adjusts based on revenue: pay more in high‑sales periods and less when sales slow. Fast decisions usually arrive within 24–48 hours.

Pros:

• No personal collateral or guarantees

• Flexible repayment tied to revenue

Fundbox

Fundbox supplies revolving lines of credit up to $150,000. It suits merchants who need short‑term funds for inventory or operations. Approval often occurs within minutes; funds follow in hours. Qualification requires around three months of business history, $50K+ annual revenue, and a credit score of 600+.

Pros:

• Fast approval and funding

• Flexible usage of credit without repeated applications

Lendio

Lendio acts as a lending marketplace, matching small businesses with over 75 lenders. Options include SBA loans, term loans, lines of credit, and merchant cash advances. A single application unlocks multiple funding offers, often with funds delivered within 24–72 hours. Lendio supports a variety of credit profiles and business sizes.

Pros:

• Access to many loan types and lenders

• One application covers multiple offers

• Suitable for various credit scores

Frequently Asked Questions About Shopify Loans

Is Shopify Capital a real loan?

Shopify Capital offers real financing options. These include merchant cash advances and short‑term loans with fixed fees based on a factor rate.

Do I need a credit check to qualify for Shopify Capital?

No credit check is required. Eligibility is determined by Shopify account performance, including sales, disputes, and store activity.

Can I repay a Shopify loan early?

Yes. Early repayment is allowed with no penalty for fee‑based loans or MCAs. The fixed fee stays the same regardless of how fast repayment happens.

How long does it take to receive funding?

Funding typically arrives within 2–5 business days after accepting an offer. Application review usually takes 1–3 days.

Can I reapply or get another Shopify loan?

You may qualify for a second offer after repaying at least 65% of your current funding. New offers appear automatically in the admin dashboard.

Does Shopify Capital affect my credit score?

No. Shopify Capital does not report to credit bureaus or affect personal credit ratings.

How many times can I receive a Shopify loan?

There’s no public cap. Shopify doesn’t specify a maximum number. Additional offers depend on repayment status and ongoing eligibility.

Final Thoughts: Should You Use a Shopify Loan for Your Store?

A Shopify loan can be a smart funding option for many online store owners, but it’s not one-size-fits-all. It offers fast access to capital with flexible, sales-based repayments and no credit checks. Still, high fees and limited eligibility may not suit every business. Weigh the pros and cons carefully to decide if a Shopify loan fits your goals and cash flow needs.