The start of a new year is the perfect time to assess what you’ve accomplished in the last year and set goals for the year ahead. When you run a business, you don’t just make personal new year’s resolutions, you also set goals for your business.
Perhaps 2024 will be the year you finally take your ecommerce business IRL by opening a brick-and-mortar store. Or maybe it’ll be the year you hire more staff to scale your success. Whatever your goals, chances are you’ll need funding to make them happen.
If you’re a Shopify merchant, you could access the cash you need through Shopify Capital. We’re giving you the scoop on how to take advantage of Shopify Capital to propel your business forward in the new year.
What is Shopify Capital and how does it work?
Shopify Capital is the business-owner friendly alternative to traditional business loans. If you’re a Shopify merchant in Canada, the US, the UK, or Australia, you could access up to $5 million in funding through Shopify Capital.
Shopify Capital makes paying back these funds simple and transparent. Depending on eligibility, you either return the investment as your business grows via a percentage of daily sales or fixed terms. Unlike traditional loans, there are no personal credit checks, lengthy paperwork, branch visits, or surprise fees.
How Shopify Capital works
Here’s a step-by-step breakdown of how Shopify Capital connects merchants with the funding they need to grow their businesses:
- Prequalify for funding: Your eligibility for Shopify Capital funding requests and prequalified amount is determined by your sales history within Shopify and your engagement with the Shopify platform. A personal credit check isn't required when applying for financing through Shopify Capital, but in some cases your business credit history might be reviewed.
- Receive offers: If your business qualifies for Shopify Capital, you’ll receive three customized offers. You’ll be notified via email and via a message on your admin Home page.
- Apply for funding: To apply to receive funds through Shopify Capital, you’ll fill out an online application.
- Receive funds: If you’re approved for funding, you’ll receive the funds via a deposit into your bank account in as little as two days.
- Pay back the funds: Shopify makes paying back your cash advance or loan easy and transparent as a percentage of your daily sales.
- Receive more capital: You could be eligible to renew capital before you’ve paid back your current round of funding. The best part is you won’t have to pay off the additional funding before you’ve paid back your original capital.
Myths associated with taking funding
Taking capital has historically been an intimidating process reserved for businesses that are either struggling or have connections. Today, capital is becoming more accessible to businesses in all stages. We’re debunking common myths that usually get in the way of small businesses considering getting funding.
- I’m not struggling: You don’t need to be struggling financially to take advantage of funding. Funding allows growing businesses to invest in marketing, inventory, hiring, and more. Having more cash gives you wiggle room to use your money.
- It's difficult to repay: With Shopify Capital, payments are a set percentage of your daily sales—sell more, pay back more, sell less, pay back less. You’re paying off what you can, rather than lump sums you can’t keep up with.
- It’s time-consuming: Shopify Capital’s application process is fast and hassle-free. You’ll only need to complete minimal paperwork online. You won’t need to write a business plan and your personal credit won’t be affected.
- It’s expensive: Shopify Capital makes funding attainable by providing merchants with competitive pricing and favorable terms.
- It’s difficult to obtain: Shopify Capital was designed for entrepreneurs to take advantage of fast funding. With insights on your sales performance, Shopify is able to pre-qualify your business making the process simpler and faster for your business to access funds and reinvest in inventory, payroll, or marketing.
Why Shopify Capital is the fast and flexible funding solution
With thousands of traditional and alternative funding solutions out there, why should you choose Shopify Capital? Here’s why Shopify Capital is the best way to infuse your growing business with cash:
- 100% Online: With Shopify Capital, the process is online, there’s no in-person process, making funding through Shopify Capital the most convenient option.
- Fast funding: If you’re approved for a cash advance or loan through Shopify Capital, you’ll receive the money in as little as two days.
- Minimal paperwork: Most lenders make the application process incredibly tedious and time-consuming and ask you to provide a business plan. Shopify already knows a lot about your business, so all you have to do is fill out a streamlined online application.
- No personal credit checks: Shopify recognizes that your business is a separate entity from your personal identity. Applying for Shopify Capital won’t affect your personal credit score, so you can keep your business separate from personal life.
- Shopify knows your business: Shopify already has access to your business data, it can proactively determine funding opportunities you prequalify for.
How to use Shopify Capital for your business
Shopify has already distributed more than $5.1 billion to its merchants through Shopify Capital. What could you achieve with an influx of cash in your business? Here are some ideas for how to use Shopify Capital, including stories of how real-world customers have been putting their funds to use.
Fund inventory and expand product lines
Your cash is tied up in inventory until you sell it, but sometimes you need to order more inventory before you’ve sold out and recouped your investment. Extra funds can help you keep your store stocked.
If you’re developing a new product, you’ll need to invest lots of money up front to make that possible. You can use Shopify Capital to expand your product line while having enough funds to keep your business running.
"Shopify Capital has been a game-changer for us. It's given us the funding we need to stock up on inventory and grow rapidly.” – Jessica Wise, CEO of Hell Babes
Other times you need cash to be able to order a large enough volume of inventory to reduce your cost per unit. Online suspension system and shock absorber retailer Shock Surplus has been able to boost its profit margins by doing just that thanks to an influx of cash flow from Shopify Capital.
“Like a lot of retailers, we're in a commodities game. When we can use capital to basically corner all the commodities of a certain unit in the country, that increases our margins dramatically. It could mean another 5 or 10 points of margin, which is a game changer for a business like ours,” – Sean Reyes, founder and CEO, Shock Surplus.
If you think sales would skyrocket if only more people knew about your business, use your Shopify Capital funds to invest in marketing. You could use that money to hire a marketing team or outsource your marketing strategy. You could have more wiggle room to invest in Facebook and Instagram ads, or fund an influencer marketing campaign. Or, you could think even bigger and use capital to film a commercial and distribute it over the air and online.
Motorcycle-culture-inspired women’s apparel brand Hell Babes has accessed funds through Shopify Capital not once, but eight times.
“The first time that I needed Shopify Capital was when we started spending money on ads. We ran them on Instagram and Facebook. I think it was just the next step necessary to reach a broader audience in comparison to what we could do organically. It opened up a bunch of doors that were previously closed.We had grown organically until this point, but when we started running ads, our sales nearly doubled.” – Jessica Wise, CEO of Hell Babes
Another way to use funds through Shopify Capital is to pay for major operating expenses.
Add new staff members to your team to increase your capabilities. Or, increase wages and add new employee benefits to avoid costly turnover and loss of productivity.
For example, you might use capital to pay your warehouse bills or rent for your commercial space. Or, if you could improve profit margins or scale more easily by taking production in-house, you could invest in manufacturing equipment.
“With Shopify Capital, my revenue has increased by 40 to 50%. This growth is a result of expanding my inventory and introducing new products.” - Jordan Lee, founder of The Public Pet
Boost cash flow
Sometimes when business is booming, you need a lot of cash flow to advance to the next step, but your funds may already be tied up.
For example, you might have a purchase order waiting from a major retailer – which could catapult your brand to a household name – but you’re not liquid enough to purchase the inventory you need to fulfill the PO. Or, you may be ready to lease or purchase a permanent retail space, but you don’t have enough cash at your disposal to cover the deposit or down payment.
In these cases, use Shopify Capital to get quick access to the cash flow you need to make your big move.
“Our $1M marketing spend generated over $11M in sales today. Plus, we have a 60% repeat purchase rate with all our customers.” – Chris Carter, CEO of Porter Road
Grow your business with Shopify Capital today
You don’t have to wait until the new year to set your business up for success. Give your business an edge by investing in it with Shopify Capital. Learn more about Shopify Capital today.
All loans in the United States are issued by WebBank.