Shopify Capital loans and repayment for merchants in Canada

Shopify Capital offers loans to merchants in Canada. Shopify Capital provides these loans as a lump sum of money called the loan amount in exchange for a fixed borrowing cost, which is specified as your cost of funds in your loan agreement.

You repay the total payment amount, which covers the loan amount and borrowing cost, through a daily payment percentage based on your daily sales. The repayment continues until the total payment amount is completely paid off, but you must pay off the total payment amount within a maximum term of 18 months. You're also required to meet 2 minimum payments within the first two 6-month periods. If your sales don't meet the minimum payment, then you might be required to make a manual payment to meet your minimum. The actual duration that you take to pay back your loan might be less than 18 months based on your sales. The specific terms, such as the total payment amount and daily payment percentage, are determined based on your risk profile.

The Shopify Capital loan agreement includes a security interest to business assets known as collateral, in the event that loan obligations aren't met. This means that your loan is a secured loan.

Apply for a Shopify Capital loan

Eligible merchants in Canada can request a loan and access funding options on the Finance page of your Shopify admin. Funding isn't guaranteed, and an offer to apply might expire without notice or the funding amount might change.

You can customize the funding offer that you want to apply for, based on available offers. The funding terms differ based on factors such as the loan amount, the total payment amount, and the daily payment percentage, and they adjust automatically based on the Shopify Capital amount but can't be customized independently. After you apply for funding, you can't change the offer amount.

After you apply for a loan, your application for funding is usually reviewed within 1-3 business days, although it might take longer in some cases. If your application is approved, then the loan amount is deposited into your business bank account. After the loan disbursement, a daily payment percentage based on your store's daily sales applies within two business days.

Steps:

1. From your Shopify admin, go to Finance.

2. In the Accounts section, click Capital.

3. In the Choose funding offer section, take one of the following actions:

   • Review the terms and details of the displayed offer.
   • In the Custom amount section, enter a custom amount, and then review the terms and details.

4. Click Apply now on the offer you want to choose.

5. Verify your identity and business details for Shopify Capital.

6. In the Review and accept terms dialog, click Shopify Capital Agreement and the PAD Agreement, and then review the terms of the agreement carefully before submitting your application.

7. Select Change my payments provider to Shopify Payments to change your repayment provider to Shopify Payments.

8. Click Submit application. You might be asked to verify your details for Shopify Capital, even if you have previously received funding through Shopify Capital.

After you receive the loan, the daily repayment based on your store's daily sales begins within two business days.

Updating your bank account for Shopify Payments payouts

If you want to change your bank account for Shopify Payments payouts and your repayments after accepting a loan, then you need to complete a new pre-authorized debit agreement. You can update your bank account from the Finance page of your Shopify admin.

You must confirm that the country and currency of the updated bank account for Shopify Payments and repayments match the country and currency of the loan before you submit your new pre-authorized debit agreement.

Requesting another Shopify Capital loan

You might qualify for a second loan before you have repaid an existing loan in full. If you're eligible for a second loan, then new funding options are displayed on the Finance page in your Shopify admin.

Viewing multiple active funding on the Capital page

If you receive new funding when you have an existing active funding, then both appear on the Capital page in your Shopify admin as separate cards:

• First card (existing funding): Payments toward your outstanding balance are called remittances.
• Second card (new funding): Payments toward your outstanding balance are called repayments.

Payments go toward the existing balance before going toward the newer balance.

Keeping track of your loan repayments

After you receive your loan, you can track the remaining balance of your total payment amount from the Finance page of your Shopify admin under Accounts.

From the Capital page, you can view the following repayment information:

• The current balance of the total payment amount.
• The amount of the total payment amount that has been repaid.
• Payment transaction history.

In the All transactions report, the Total sales column contains each day's sales revenue, and the Amount column contains how much of that revenue is repaid to Shopify Capital.

Download your balance letter

You can download a balance letter from the Finance page of your Shopify admin. You can use the balance letter to confirm with your bank that you no longer have any financial obligation, or to provide your current balance.

Steps:

1. From your Shopify admin, go to Finance.

2. In the Accounts section, click Capital.

3. Click View all transactions.

4. Click Export, and then click Balance letter.

5. Save the balance letter to your device.

Repay the remaining balance of your loan

You can manually pay back any amount over $1 CAD towards your loan or clear up to the entire outstanding balance at once. The payment is debited from the same business bank account linked to your Shopify Payments account.

Steps:

1. From your Shopify admin, go to Finance.

2. In the Accounts section, click Capital.

3. Click Make a payment.

4. Choose the amount that you want to pay:

   • To make a manual payment, enter the amount in the Custom amount field.
   • To pay the full amount, click Full remaining balance.

5. Click Next step, and then review the amount to be repaid.

6. Click Make a payment.

You receive a confirmation email when your repayment is complete.

Calculating your daily loan repayment

Your daily payment is based on a percentage of all sales that are associated with your Shopify account and the services that are provided under your account.

This includes sales on your Shopify online store, at your retail locations, from any sales channels that you have, and through any apps, such as Shopify Marketplace Connect and Shopify Collective.

Daily sales revenue is calculated using the final total transaction amount for each day. This calculation includes all orders marked as paid on that day, regardless of the order source, the payment processing method that was used, or whether the order was later refunded or canceled. The total transaction amount also includes all charges, such as shipping and handling, as well as any applicable sales taxes, such as duty and value-added taxes. The daily payment percentage is applied to the total transaction amount.

Test orders that you place when Shopify Payments is in test mode aren't included in the repayment calculation. If you place an order without test mode activated, then the order is included in your store's sales revenue for the day's repayment calculation.

No payment is taken on days when there are no sales associated with your Shopify account or the services provided under your account.

Minimum payments with Shopify Capital for Canada

Shopify Capital loans include 2 minimum payment thresholds. These changes are outlined in the Shopify Capital loan agreement terms. Your progress is reviewed at the 6-month and 12-month marks within the loan term to determine if you meet these minimum payment thresholds. These evaluations are important to help ensure that you're making progress towards paying your loan.

The minimum repayments are 30% of the total payment amount by the 6-month mark and 60% of the total payment amount by the 12-month mark. These payments are calculated based on a percentage of your daily sales, known as the daily payment percentage. These minimum payments are in place to help you stay on track with your loan repayment.

If you fail to meet the minimum payment threshold during these evaluation points, then it might result in an event of default under your loan agreement. Refer to your loan agreement for more details on the actions that might be taken if you miss your minimum payments and an event of default.

Loan repayment time frame

The maximum term for Shopify Capital loans is 18 months, within which the total payment amount must be fully received. Shopify Capital loan repayments are based on a percentage of your daily sales, so the actual duration needed to repay the loan could be less than 18 months.

If your sales slow down so that you aren't on track to meet the maximum term of 18 months, then you could be in default under your loan agreement. Therefore, it's essential to monitor your loan payment balance and make a manual payment to avoid defaulting on your agreement.

Failed Shopify Capital payments

If your debit payments are paused or fail, then you might be in default of your loan agreement. If a daily Shopify Capital repayment fails, then the payment isn't debited again. However, your next day's loan repayment, that's based on the daily payment percentage calculated from your store's daily sales revenue, is debited as usual.

To address the failed payment, you can make a manual payment. This lets you proactively address the missed payment and ensure your loan repayments remain on track.

Secure your Shopify Capital account

If your Shopify account has been compromised and you use Shopify Capital loans, then you must take immediate action to protect your finances and report fraudulent activity.

Contact Shopify Support immediately if you identify unauthorized Shopify Capital loan activity. Repayments begin as soon as funding is disbursed, so time is critical. You can’t report Shopify Capital fraud in your Shopify admin.

Steps:

1. Review your loan payment details for unauthorized funding.
2. If you identify unauthorized loans or changes to your repayment settings, then contact Shopify Support immediately.
3. Verify that the bank account connected to your Shopify Capital account hasn't been changed without authorization. Shopify Capital loan repayments are debited from any of the following accounts:
   • The bank account connected to Shopify Payments.
   • Your Shopify Balance account if it's set as your payout account.
   • The external bank account that you set up in your Shopify Capital settings (for non-Shopify Payments users).

Examples of fraudulent activity

The following types of activity might indicate that your Shopify Capital account has been compromised:

• Unauthorized funding: Loan funds requested or accepted without your knowledge.
• Unauthorized repayment setting changes: Unauthorized changes to your repayment precentage rate or repayments settings.
• Unauthorized bank account changes: Unauthorized changes to the bank account used for Shopify Capital loan debits.