Shopify Capital Lends a Hand to Small Businesses
Shopify says that small businesses can have a little bit of money, as a treat.
But in all seriousness, it is no secret that starting a business can be extremely difficult. Even with the best ideas, many potential entrepreneurs still struggle to secure initial financing to kick-start their businesses.
That’s why the Canadian ecommerce company is making things a little easier for anybody who wants to become an online merchant by announcing the launch of starter loans.
The service is being offered through Shopify Capital which is the unit that offers financing to its online sellers. It enables new merchants to get an initial loan of $200 when they sign up to Shopify and link their bank account.
The money can be used to build a brand, add inventory or to begin marketing. The idea is to empower even more people to use their platform to hawk their products or services.
The starter loans will be available to merchants in 14 US states, including Arizona, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, North Carolina, South Carolina, Utah, Washington, Wisconsin, and Wyoming. Shopify stated that eligible merchants will be invited to apply for the loans by authenticating and linking their bank accounts to Shopify. Funds will then be deposited directly into bank accounts.
Entrepreneurs will be expected to repay the loans automatically, as a fixed percentage of their Shopify store’s daily sales. Repayment will also include “milestone payments” of $38 every 60 days until the total amount owed is repaid.
Interest that a borrower pays is based on the eCommerce platform’s underwriting but the company said it expects the majority of borrowers to pay a rate that is in the “very” low teens.
The loan program is the latest product for Shopify Capital, which was launched in April 2016. Since then it has advanced more than $750 million in loans.
This is an excerpt from The eCommerce Minute podcast, a daily podcast featuring eCommerce, Tech and Retail News.
The podcast is a production of SUMO Heavy Industries, a digital commerce consulting firm with offices in Brooklyn, NY and Philadelphia. Subscribe wherever you get your podcasts.
