When enthusiasm and innovation strikes, you can’t wait around to win the lottery. Equally, you probably don’t want to end up taking out a cash advance that means you have to pay more back on interest than the initial lump sum amount!
For a business to start off with the best foot forward, it’s necessary to have capital. There’s a lot to organise from designing the website, crafting product lines and all those other processes that require a store owner's attention and dough… And both of these can be stretched thin in the day to day runnings of an online store.
Applying for loans can place a massive wall in front of entrepreneurs’ aspirations and also make for costly delays. Shopify Capital was born out of these frustrations. Shopify wanted its merchants to thrive in the first stages of finding their entrepreneurial feet.
Receiving this merchant cash advance of $400 to $500,000, depending on your risk profile, you can imagine you the headstart this gives you to get ahead of the chasing pack! It means that you can take your business operations seriously, invest in automation and high-quality materials and operations.
Relaxed borrower qualifications make the process a whole lot more hassle free too. This system bypasses the outdated system of convoluted application processes and endless forms.
Currently, the project is set up for a select few merchants in the US.
However, watch this space if you don’t fulfil the current geographic criteria as Shopify plans to roll out this funding assistance scheme across more countries in the following few months.
The Shopify platform enables you to start selling today, and now with Shopify Capital, you can obtain a cash advance to kickstart your very own online store. This program is currently only available to merchants in the US, but Shopify has stated that they’ll be rolling it out in additional countries over time.
Why Shopify Capital might be for you
You may not want to deal with:
- Interest rates
- Processing fees
- Minimum repayment plans
- Lengthy and confusing paperwork
- Late fees
Shopify Capital is for those who are fed up with traditional business loans. Or perhaps this line of credit is just not open to you, as is the case with so many start-ups.
The truth of it is that 50% of small businesses fail within the first five years. This is higher than ever before. Most likely, your budding entrepreneur ears are burning right now. If you want a guided, tailored and holistic plan on how to lengthen your business lifecycle, you can get in touch here.
So banks are reluctant to touch start-up loans with a ten-foot barge pole for fear that you won’t be able to pay back. Unfortunately, for the brave innovators looking to make a splash with their online brand, the rates they will offer you if you manage to get cleared for a loan are likely to be very steep.
It’s understandable to be wary of bank loans as you may be putting a lot on the line for your business. In many cases, start-up founders will put their property down as collateral. Although this self-belief and passion are admirable, the added stress of putting your shelter on the line is a very hardcore risk.
Another option is to receive a traditional cash advance. Although this has the positive of not having to put down collateral, there are steep drawbacks to this cash flow method. Interest rates are sky high so bankers can enfold the risk of not having collateral and fees can topple in on a business if a repayment is missed.
Investment from an invested company
Another aspect of this programme to consider is the fact that Shopify wants you to succeed.
Think about it.
Their business model runs by having successful businesses use their platform. By giving you that initial leg-up and not trying to hammer you down with ludicrous fees, they’ll have a successful business thrive and increase their revenue. It’s a clever initiative by Shopify to future-proof their own platform.
In the first quarter of this year, Shopify’s annual report shows that Shopify Capital issued $60.4 million in merchant cash advances.
Here’s how one business decided to harness the opportunity.
This Los-Angeles activewear brand used their Shopify Capital to develop a new ultra-sustainable fabric made from recycled bottles and the pulp of eucalyptus trees.
The founders of Pistol Lake didn’t need to waste time with loan applications or sink further equity into attaining the funds. They could get on with creating innovative products to accelerate Pistol Lake’s success.
“Shopify Capital was a no-brainer because we’ve entrusted them for over three years as our eCommerce platform—the core of our business— and they’ve been the best partner we could ask for."
How to apply for Shopify Capital
Unlike a traditional banking loan application, Shopify Capital doesn’t come with monthly repayments. Instead, the system works by giving you a lump sum in exchange for a percentage of your store’s future daily sales until you have paid off the total amount receivables purchased.
Here is an example of how Shopify Capital works:
How to request a cash advance
- On your Shopify admin, head to Settings > Capital.
- Click View Funding Offers in the eligibility message from Shopify Capital (currently only available for certain US merchants).
- You’ll be posed with three transparent funding options. You can hit Request beneath ones that appeal to you. Each option details the amount received, total remit that Shopify Capital will buy and remittance rate to be deducted from daily sales. These remittance rates allow for the ups and downs of running an online business.
- Once you’ve selected a funding option that suits your needs, there will be a Review and Accept terms section, which includes a T&C’s section. Click Shopify Capital Agreement to enable it to open another browser tab.
- We advise that you review the terms of the agreement here and if you agree to the terms, head back to the Review and accept terms page and select Accept terms.
You’ll hear back from the team at Shopify Capital 2-5 business days. If you're approved, then your merchant cash advance will be delivered to your business bank account.
What are the main criteria to apply for Shopify Capital?
Currently, the main criteria for eligibility include:
- your store is located in the United States;
- you have Shopify Payments enabled in your account;
- your business has a low-risk profile;
- your store processes a certain amount of GMV (Gross Merchandise Value).
If you’re new to Shopify and looking for a tailored consultation to optimize your store’s performance then we’d recommend us since we’re really friendly, have an excellent track record of increasing the success of Shopify stores, and we never blow our own trumpets...