(This is a guest post from our friends over at Payability, a finance company that helps marketplace sellers take control of their cash flow issues and finally grow their businesses.)
For many small business owners — and especially eCommerce sellers — access to capital is a major growth hurdle. To effectively grow your eCommerce business, you need to invest, be it in a marketing campaign, new employees, or bulk inventory, for example. While it might work for some eCommerce businesses, going to a bank for financing isn’t always the best option (after all, the process is cumbersome, lengthy, and often a wasted effort due to low approval rates for online businesses).
But you likely already knew this. What you might not know is that there are financing options designed to work with your business, so you can get the cash you need — when you need it. In this guide, we break down popular options like Shopify Capital, Payability’s Instant Advance for Shopify, and more.
Disclaimer: This post is not intended as financial advice. We are just introducing a few common funding options for Shopify stores. There are thousands of other funding solutions so we always suggest doing additional research before making a decision for your business.
Shopify Capital: What It Is & How It Works
Shopify Capital offers two types of financing for eligible Shopify merchants: a merchant cash advance and a business loan. Eligibility is based on your history with Shopify; if you meet their minimum requirements, you’ll get an offer in your Shopify Admin page. If you accept the offer, then you’ll go through a simple application process that requires minimal paperwork and no credit check. If you’re approved, funds will be deposited in your business bank account within two business days. Here’s a little more about how Shopify Capital works:
- Funding Amount: Between $200 – $1,000,000
- Interest: There is no interest. Instead, you’ll have to repay a fixed amount/flat fee.
- Repayment Terms:
- MCA: A fixed percentage of your sales is remitted on a daily basis until the total amount owed is repaid.
- Loan: A fixed percentage of your sales is remitted on a daily basis over the course of 12 months. Within those 12 months are six 60-day repayment cycles with minimum payback amounts.
- Actual remittance amounts: Because repayment is based on a fixed percentage of daily sales, the actual daily payment amount changes. So if you have a slow sales day, the repayment amount is small. If you have a big sales day, the payment amount will be more.
- Early Payment Benefits: None.
- Eligibility: Shopify Capital determines eligibility based on your account health and history on Shopify. So it only “works” if you use Shopify’s eCommerce platform to host your website and/or use their point-of-sale system — i.e. it won’t be able to factor in any other eCommerce data if you sell on other platforms or marketplaces.
- How to Apply: You cannot apply directly to Shopify Capital, but if you see an offer in your account, you’ll have to complete a simple application to get a final approval and funds.
- Credit Check? No.
If you see an offer in your account, note that it will be valid for 30 days. If it expires, you will either see a new offer or none at all. It all depends on your eligibility status on the day of expiration.
If you don’t see an offer, if one expires and you don’t get a new one, or if you need more than what is offered — don’t worry. You have plenty of other financing options. For example, Payability’s Instant Advance for Shopify. Head to the next section to learn more.
Payability Instant Advance for Shopify: What It Is & How It Works
Payability, a financing company designed specifically for ecommerce sellers, is dedicated to giving online sellers access to fast, friction-free funding — no matter what marketplaces or platforms you sell on. With Payability’s Instant Advance for Shopify, you could get up to $250,000 as soon as tomorrow to take your Shopify business to the next level. Approval and actual funding amount is based on your account health and sales performance — not credit.
If your business extends beyond Shopify, you can connect your other marketplaces and platforms to get an offer based on your entire eCommerce portfolio (not just your Shopify sales). And, if you already have funding from Shopify Capital or another financing provider, Payability can still give you the extra boost you need to achieve your goals faster.
Here’s more about how Instant Advance for Shopify works:
- Funding Amount: Up to $250,000 (actual amount is typically 75% – 150% of one month’s worth of total sales revenue).
- Interest: There is no interest. Instead, you’ll have to repay a fixed amount/flat fee. Fees start at 0.50% per week with no origination fees. Pay back early to lower your cost.
- Repayment Terms: Instant Advance for Shopify is a purchase of your future receivables. As you sell, you’ll remit a fixed percentage of your sales to Payability until the total amount owed is paid back. Similar to Shopify Capital, the daily payment amount changes depending on how much you sell.
- Early Payment Benefits: You’ll receive a fee rebate for every week you pay your advance back early.
- Eligibility: To qualify, you must have at least nine months of selling history and make at least $2,000 on average in sales per month. Payability connects to many of the top eCommerce platforms and marketplaces to determine your eligibility and an appropriate offer. These include Shopify, Amazon, Walmart, Newegg, Tophatter, Etsy, Volusion, and more. So unlike Shopify Capital or Amazon Lending that only apply to their respective platforms, Payability takes a holistic view of your entire eCommerce business.
- How to Apply: Fill out a simple online application (takes less than 10 minutes). No paperwork required. Get decisions and funding in as fast as 24 hours.
- Credit Check?: No.
- Need help during the process?: You can speak to a US-based account rep about your offer — no virtual answering services or all-or-nothing automated offers. Payability’s team is available to answer questions and provide real human support both pre and post-funding Monday-Friday from 9 a.m. to 6 p.m. EST.
What’s more, Payability also offers Instant Access, a financing solution that will get you paid daily and in real-time. So if you want to get paid the next day on sales, every day, Payability can help.
Using Payability and Shopify Capital Together
As we mentioned previously, Payability’s Instant Advance for Shopify can supplement any existing funding you already have, be it from Shopify Capital or another financing provider. For example, if Shopify Capital offers you a max of $10,000, but you really need $15,000, Payability can help bridge the gap. Just speak to one of Payability’s US-based reps to get started.
If you’ve done any amount of research on business financing options, you know that there are a lot — especially for eCommerce sellers like you. In addition to Shopify Capital and Payability, you can also boost cash flow and invest in growth with solutions from providers like Square Capital, Stripe Capital, or Fundbox.
Square Capital and Stripe Capital work very similarly to Shopify Capital. By looking at your history on their respective platforms, Square Capital and Stripe Capital offer funding options on an invite-only basis, fund in as fast as 24 hours, auto-deduct a fixed percentage of daily sales as payback/remittance, etc. Fundbox offers a revolving line of credit as well as net terms for your customers. Fundbox’s minimum qualifications include $50,000 in annual revenue, three months of invoicing history, a business bank account, and a minimum personal credit score of 500.
As you can see, there are a variety of financing options for your ecommerce business. To find a solution that’s right for you, consider how you run your business. In other words, do you operate on many platforms or marketplaces, or just one? How much money do you need and when do you need it? How is your daily cash flow? When you look at your business and financing needs from a bird’s eye view, you should be able to determine where to apply for funding first.
About the Author
Victoria Sullivan is a Marketing Manager at Payability. She has over eight years of social media, copywriting and marketing experience. Prior to joining the Payability team, Victoria developed social media content and strategies for top technology brands such as Skype and Samsung. She holds a degree in Advertising from Syracuse University’s S.I. Newhouse School of Public Communications. She can often be found in a yoga class or working on her fashion blog.
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