Disclaimer: This post is not financial advice. It’ll give you an overview of your options, but we recommend you do your own research before making your final decision.
You’ve probably noticed that traditional lenders don’t really understand how Shopify stores work. Within the fast-evolving ecommerce landscape, your business needs to be able to adapt and scale quickly, from super scrappy startup to intentional investments in accelerated growth. And most traditional funding providers aren’t fast enough, or flexible enough, to get the job done.
The good news is, there are now many more funding options beyond what your local bank or SBA can offer. But how do you know which one is the right option for your unique situation?
The good news is, you’re in the right place. We’ve done the research to help you learn which criteria to think about so that you can make a confident decision, and get back to running a successful Shopify store.
Ready? Grab a cup of coffee and dive in.
The scoop on funding for Shopify stores
- Why choosing the right Shopify finance platform matters
- How to decide which type of funding your Shopify store needs
- Option 1: SBA loans
- Option 2: Crowdfunding
- Option 3: Platform-specific ecommerce financing options
- Option 4: Payability Instant Advance for Shopify
- Option 5: SellersFunding
- Which funding option is right for your Shopify store?
Want the latest ecommerce scoop right in your inbox? Sign up for our free, spamless newsletter and you won’t miss a thing.
Why choosing the right Shopify finance platform matters
Shopify finance can feel like a minefield. There are so many options out there, and so many reasons you may need funding — and that’s actually the first thing to know:
There is no one-size solution for funding every Shopify store.
Whether you’re a startup looking to make your first hire, an established retailer looking to stock up on inventory for your next busy season, or you’re ready to double down on marketing and advertising in order to hit the next level, at some point you’re going to need funding that’s designed for businesses like yours.
And that funding has to be flexible enough to meet your needs, not force you into a box you’ll regret later.
Plus, finance options created with traditional brick-and-mortar businesses in mind are simply too slow and paperwork-heavy to be practical for fast-paced ecommerce businesses. Even among options designed for ecommerce, terms vary so widely that you have to know exactly what you’re looking for and how to get it.
Bottom line? It pays to do some research before you make a decision.
How to decide which type of funding your Shopify store needs
Traditional lenders and investors don’t understand how quickly ecommerce businesses can grow and change. Which means they have long, slow approval processes that hold you back from reinvesting into your ecommerce business’s growth.
Here are a few criteria that will help you decide what Shopify finance option is right for you. Write down your answers before you start comparison shopping:
- How much do you need? Be realistic, allowing yourself to set big goals within the limits of what you know you can repay.
- How soon do you need it? If you need funding fast to take advantage of a time-sensitive opportunity, some financing options will be far too slow.
- What’s your sales history and monthly revenue? The stronger and more established your ecommerce sales history, the more options you’ll have.
- How’s your credit? While some funders focus on your Shopify store’s sales history to determine eligibility and loan size, others take your credit score into account.
- Where are you selling? Some funding options are limited to specific platforms, while others determine your eligibility based on total sales across marketplaces.
Now with those notes in hand, let’s look at some top funding types to consider.
Don’t get left behind as your competitors evolve and grow. Subscribe for the latest no-nonsense ecommerce tips you can actually use.
1. SBA loans for Shopify stores
The first thing to know about SBA loans is that these loans don’t come directly from the US Small Business Administration (SBA), but through their lending partners. The SBA’s partnership reduces the lenders’ risk, making it easier for both lenders and borrowers to access capital. Since this is a traditional loan type, it’s slower than you may need for an ecommerce business and can affect your credit score.
An SBA loan is a good option for small businesses that can’t get funding elsewhere, though – that’s actually one of the eligibility requirements. And you may be able to get startup funding even if you have bad credit.
Bonus: SBA-guaranteed loans not only have competitive rates and terms, but sometimes include ongoing education and guidance to help you maximize your return.
- No sales revenue requirement
- Government-backed to reduce risk
- Competitive rates and terms
- Ongoing training and counseling sometimes included
- Poor credit accepted
Who it’s best for
Small businesses and startups located in the US that can’t get funds from another lender.
There’s good news and bad news about crowdfunding.
The good news: it’s easy and inexpensive to get started raising funds from friends, family, and beyond, which explains the proliferation of crowdfunding sites and campaigns over the last several years.
Typically these funds are gifts, investments, or pre-orders rather than loans, so you won’t need to repay them. And if you’re thoughtful about it, crowdfunding can foster a sense of ownership, and even community, among your supporters.
The bad news: it’s hard to do crowdfunding well.
Far from the quick fix many fundraisers hope for, crowdfunding tends to deliver disappointing results unless you can build a coordinated, multichannel fundraising campaign around it. If you’re expecting to put up a page, share the link, and magically hit your goals, you’re in for a rude awakening. Plus, if you don’t meet your goals or deliver what you promised, you may have some very irritated funders on your hands.
Keep in mind that each crowdfunding platform is designed for a specific purpose. While some are more of a household name than others, which helps with the trust factor, the most important thing is to choose a crowdfunding platform designed for what you need.
For example, if you need to fund an online art studio but use a platform designed for tech innovators, you may have a hard time reaching the audience (and results) you need. Likewise, if you opt for name recognition and fundraise on GoFundMe, that may not fly with the high-level decision-makers you need to appeal to.
Some of the most popular options include:
- Crowdfunder — a Shopify app for pre-order crowdfunding
- Kickstarter — startups and products in a variety of industries
- Patreon — monthly support for artists and creatives
- Indiegogo — tech and innovation
- GoFundMe — individuals and charitable causes
If you choose to crowdfund for startup or growth financing, make sure you do so infrequently, or risk supporter fatigue and frustration. Since the idea is for your business to turn a profit and sustain itself, you don’t want to sketch people out by asking for donations if you don’t have to.
- Quick and inexpensive to get started
- No need to repay
- Done well, can build community engagement and a loyal base
- Niche crowdfunding sites can help you get in front of the right investors
- Requirements, features, and terms vary widely among platforms
- Works best as part of a strategic multichannel fundraising campaign
Who it’s best for
Businesses with established credibility and a loyal following, in need of short-term funding.
3. Platform-specific ecommerce financing options
Shopify, Square, and Stripe all offer pre-qualified loans exclusively for shops using their platforms — they’re called Shopify Capital, Square Capital, and Stripe Capital, respectively. (Give ‘em a break, they’re in financing, not creative writing.) All three are more flexible than a traditional bank loan, with a less cumbersome application process.
Here’s how it works. If you’re using their platforms and have a good sales record, they may send you an offer for financing, which you can either ignore or accept. (Kind of like the credit card offers you get in the mail.)
The plus side is that this cuts down on red tape, since you already have an account with them, and they already have the data to make you an informed offer. But you can’t apply directly, so these may or may not be options for you when you really need them. And you may not have the option to change the loan terms to suit your needs.
- Simple application process with no credit checks
- Funds are available within days
- Repay a fixed percentage of your daily sales
- Available only by invitation within each platform
Who it’s best for
Ecommerce stores with an established sales history through Shopify, Square, or Stripe.
4. Payability Instant Advance for Shopify
When you’re ready to move beyond a specific platform and get the funding you need, almost on demand, Payability Instant Advance for Shopify could be your next step. You can get an advance based on your sales history, not your personal credit.
With this option, you could qualify for up to $250,000 to use however you want. Strong sales typically mean you can qualify for a larger advance, but it’s usually around a month’s worth of your sales. And all your marketplaces (Amazon, eBay, etc.) count toward your sales eligibility, not your Shopify store alone. But if you need time- and money-saving ecommerce integrations or a larger Shopify loan size for serious growth, this won’t do it for you.
- Simple, quick application and approvals
- Borrow up to $250,000 the same day you’re approved
- Sales evaluation includes all your marketplaces, not just Shopify
- Repay a fixed percentage of your sales
- No credit checks
Who it’s best for
Established Shopify stores with at least 9 months of selling history and $2,000+ in monthly sales.
Probably the most flexible option, SellersFunding working capital is ecommerce finance designed for ambitious brands (even ones who operate across multiple borders and currencies). It offers the quick turnaround of other ecommerce-first options, plus more flexible choices, larger loan amounts, and integrations that make your life in ecommerce even easier.
If you’ve got big plans that need a solid injection of capital, this may be the right choice for you.
- Get funded in under 48 hours
- Fast and easy approvals based on sales history
- Soft credit checks won’t affect your credit score
- Pre-qualify for up to $1M in working capital
- SellersFunding Daily integrations with major ecommerce platforms, for next-day payouts
- SellersFunding Wallet integration, for easy global payments in over 37 currencies
- No pre-payment penalty
Who it’s best for
Ecommerce shops with at least 6 months of sales history and $20,000 in net sales per month.
Which funding option is right for your Shopify store?
All of the above options can be great ways to get the Shopify capital you need to grow your business. Whether you choose a loan, an advance, or crowdfunding, you need funding that fits your cash flow, number of marketplaces, timeline, and loan size, among other factors.
Take some time to review your options, but not too long — the growth you’ve been planning for is on the other side of this decision. So get to it, and enjoy!
To learn more about Shopify funding and the newest developments in ecommerce, sign up for our free newsletter. You’ll get the whole scoop, with no spam.
5 Things You Can Do for a Profitable New Year When You're Swamped in Q4Continue reading
How Much Does a Merchant Cash Advance Really Cost?Continue reading
How Chinese New Year Can Affect Your Store (And What To Do About It)Continue reading
What to Do If Your Amazon Listing Gets HijackedContinue reading
Cross-Border E-commerce: Why the Next Big Opportunity Is GlobalContinue reading
Want the Best E-commerce Tech Stack? Here's What You Really Need to Think About.Continue reading
Winning Black Friday Sales in 2022: The Online Retailer’s GuideContinue reading
Is Black Friday Canceled? The Rise of Early Holiday ShoppingContinue reading
Growth Gone Wrong: 12 True E-commerce Horror Stories to Make Your Spine TingleContinue reading
Looking for the Best Amazon FBA Alternatives? 5 Fulfillment Options to ConsiderContinue reading