Shopify Capital Review: How it works + How I got over $22k

Trying to acquire funding and capital for your business can feel overwhelming when you’re in the middle of trying to figure out everything else. Most common options for funding like banks and investors will ask for a detailed business plan with projections, marketing plans, the current capital, business credit, personal credit, assets, and more.

However, when you’re first starting out you may not have all of those things 100% mapped out. And this barrier to funding is what makes Shopify capital amazing. Since I’ve qualified for Their funding since 2019, I’d love to share my experience with you, how I’ve invested and what I’ve learned along the way.

Overall, it’s been an amazing experience for me. To date, I’ve received about $22,000 from Shopify capital. This money has helped me buy equipment, expand into an official warehouse, increase our order volume, improve our marketing, and more.

 

Side-note: Support our small business for Black Friday by using us for your custom print needs. We are offer free custom branded tissue paper with every order of 150+ business cards. Learn more here!

In this review, I will cover 6 things: 

- What is Shopify capital?

- How I qualified for and received the capital.

- How the deposits and payments work.

- Advance requirements & legal aspects.

- What happens during hardships?

- How I invested the funding.

_________________

What is Shopify capital?

 

Shopify Capital is an advance on the money Shopify predicts you will make over the payback period. From my understanding, it is a 0% interest advance. They do charge a loan processing fee, which all institutions do. The fee depends on your loan amount.

For example, when I received my first advance for $750 in July of 2019, my advance processing fee was $93 with a 15% remittance rate. The remittance rate is how much of your daily sales they take to put towards paying down your balance. So if my daily sales were $200, they’d take $30 from that sale. I believe this is why the frequency of your sales matters so much in terms of paying back your advance.

Just so you know, you cannot apply for Shopify capital.

When you qualify for it based on your sales volume, value, and frequency, they will reach out to you in 2 ways.

First, they will put an application alert link on your dashboard. Doing this gives you access to the capital rules, fees, amount owed, and they’ll even tell you when you’re eligible after paying off 51%-85%.

Secondly, they will email you to check your Shopify capital offers in your dashboard. So make sure your Shopify notifications are on and that you read the emails, it could be money calling.

Now, when you “apply” it’s not a typical application process. They do not ask for any invasive information & they do not run credit checks. They already have the information they need, we’ll cover this more below.

______________

How I qualified for and received the capital

Now, by the time Shopify offered me capital from my first store in 2019, I’d been on Shopify for a year and made about $35,000. From January 2019 - July 2019 When I qualified for this advance, I made about $15,000 or about $2,100 online a month. 

My largest advance to date was in April of 2021 where they gave me $7,000. From January 2021 - April of 2021 I produced about $40,000 online, which explains why my advance offer was 7 times higher than what my first offer was in 2019.

I’ve seen loans as small as $250 for other accounts and I believe this is the smallest the loans go. But hey, when you’re just starting with limited capital, $250 can help you buy ads to raise brand awareness and get more clients. Every little bit counts, in my experience. 

Side-note: Support our small business for Black Friday by using us for your custom print needs. We offer free custom branded tissue paper with every order of 150+ business cards. Learn more here!

 ___________

 How the deposits and payments work.

After you accept a funding offer in the dashboard, you will go through a 1-5 business day account review for approval. After approval, the funds will deposit within 24-48 hours in your business account linked to your Shopify store.

After you receive the funds, they will begin the remittance or pay back process the following business day. So any sales you make after the money is deposited, they will begin taking a percentage of these sales. 

The percentage they take varies from 8% - 17% of each sale until the advance is paid off. These remittance percentages can vary based on profile reviews.

__________

Advance requirements & legal aspects


Everything they need to qualify your account:

- business address

- contact information

- access to your business bank account

- a confirmed source of income

- website income volume

- website sales frequency 

- if you enter in your product data they will also know your supplier, inventory, and profit margins. 

With all of this, they don’t necessarily need to run a background check or credit check, which makes this much more accessible than many other funding options. Since you will need a business bank account, you will also need an EIN (you can get that for free here), a DBA (doing business as registration), a government issued photo ID and $100-$500 for the deposit to open the account.

Pro Tip: While you’re at it, consider getting your D&B (Duns and Bradstreet number. This helps you establish trade lines to build credit & open you up to more funding opportunities).

A similar option to Shopify capital would be PayPal, but I believe they do a credit check on you, not your business. I would double check this before you apply if you want to avoid being personally responsible for your businesses debt.

___________

What happens during hardships?

If you go through financial hardships, please make sure you contact them immediately. They are very understanding and can offer you several payment plan options.

I learned this in 2019 when I closed one of my small online shops. I had a small accessories shop but when I closed it, it had an $800 capital loan and I still owed $500, they let me pay $150 a month until it was paid off. Although I paid it off in 45 days so it didn’t disqualify me from any future funding options.

If you try to escape paying them back, they will lock any Shopify store associated with you. You can avoid this by asking for a payment plan. Otherwise once they lock your store, they can also sue you which will cost you significantly more in the long run.

Side-note: Support our small business for Black Friday by using us for your custom print needs. We are offer free custom branded tissue paper with every order of 150+ business cards. Learn more here!

___________

 

 

 

How I invested the funding.


Over the last 3 years, I’ve used the capital to help me scale and grow my business. For example, in 2019 I made about $55k online, but with the capital in 2020 I made $100k. Then in 2021, I’m projected to make $20-$30k more than I did in 2020.

Here’s Somethings I’ve invested to grow my business:

      • iMac Desktop
      • Epson ecotank printers
      • Cricut machines and software
      • An I-Pad Pro + Apple Pencil
      • Warehouse overhead and utilities 
      • A Facebook ads, blogging and Pinterest expert (one on one coaching)
      • A professional camera for product photography and videos
      • Contractors to outsource when I’m overwhelmed 
      • A rainy day fund for sick days and unexpected expenses 

$22,000+ has and continues to do so much for my business. I’m forever grateful that Shopify has given me so much support while many banks will not do so due to age, credit or racism to be frank with you.

So if you’re thinking about accepting the offer, I say go for it if you have a strategy for how you plan to invest and scale your business. 

If you need help growing your online sales to increase your capital offers, grab this content marketing resource I created for small business owners just like you.

Be sure to leave a comments and let me know how much you loved this article. Also, be sure to share on social media and tag me, you never know who needs this type of advice and insight.

2 comments

Ty (Author)

Hey Jack! I’m not saying it’s the BEST ever, I’m saying it’s the best I’ve used so far and the easiest in terms of applying, repaying and requalifiying without credit checks, formal ID and processes banks and lenders usually take you through. 🙂

Ty (Author)
Jack

This is a great write up and Shopify capital sounds great, but I don’t see how/why Shopify capital is the best. Did you compare it to options like Clearco?

Jack

Leave a comment

All comments are moderated before being published