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Shopify Capital: Offers Cash Advances to Canadian Customers

The e-commerce firm announced that Shopify Capital, its financing arm, will provide loans to small businesses in its home country of Canada.
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Shopify has joined the ranks of big tech firms providing relief to business owners to help them through these difficult times.

Earlier this week, the e-commerce firm announced that Shopify Capital, its financing arm, will provide loans to small businesses in its home country of Canada.

Lending a Helping Hand to Small Businesses

Per a report from the Financial Post, chief operating officer Harley Finkelstein confirmed that Shopify Capital would be focusing on sustaining businesses in Canada, providing them with loans ranging between CA$200 and CA$500,000.

Finklestein explained, however, that the aid isn’t a loan. Instead, it’s a cash advance, as Shopify knows its detrimental to its corporate growth to have merchants who stop making sales due to the pandemic.

“No credit checks, no deadline on the repayment. The business is not obligated to pay for anything if they’re not making sales. There’s no interest; it’s a factor rate, which is different. And it’s not secured with any collateral,” he said, per the news source.

However, not all businesses using Shopify will be able to qualify for the program.

Merchants will have to apply for it and repay it from the sales they make with the firm’s tools. The cash advances will also be disbursed based on the businesses’ structure and financial history.

The advances will be insured by Export Development Canada, the country’s state-owned export credit agency. Shopify has also confirmed that the advances will be seamless and low-risk, since the firm will have access to important information such as merchants’ selling history and financial data to help make underwriting decisions.

Shopify Capital’s Impressive Reach

Shopify is one of the world’s leading e-commerce platforms, as it provides small businesses with the infrastructure they need to build their stores and host them on its site. With its service, these businesses can work without being overly reliant on any of the other e-commerce platforms that might not be sustainable for sole proprietor and small-scale firms.

Shopify already has over a million businesses on its platform, thus putting it in a position to achieve massive reach with the new program. The firm also facilitated upwards of $60 billion in sales last year, netting a cool $1.6 billion in the process.

The Ottawa-based firm went on to launch Shopify Capital in April 2016 as a means to help provide funding to its merchants.

The service offers starter loans to eligible merchants on the Shopify payments network, with initial loans of $200 that will help the merchants get their brands off the ground and aid them in adding inventory.

Loans on Shopify Capital range from $200 to $1 million. The business has mainly been profitable so far, reporting over $750 million in funding over the past three years.

The development is coming barely a month after Shopify pumped $200 million into the financing arm to help merchants through the coronavirus.

At the time, the firm also made gift cards available for all customers and plans as a means of helping them to free up cash flow and alleviate the pandemic’s effects on their operations.

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Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works. jimmy@moneycheck.com

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