Shopify Capital launches in Australia ahead of peak sales season
What is Happening?
Shopify Capital is launching in Australia to provide quick and easy funding up to $2.5 million AUD for thousands of merchants to accelerate growth, expand to new markets, and prepare for the peak sales season.
Instead of paying a fixed sum each day or month, Shopify collects its cut by deducting a percentage of your revenue each day. Typically, this is called a “withholding rate,” but Shopify calls it a “remittance rate.” The remittance rate that Shopify uses as an example is 10%, but your rate might be higher or lower.
Because the amount collected fluctuates with your cash flow, you will not have a set repayment date. Instead, Shopify simply keeps withholding its daily cut until the total repayment amount has been collected.
The company relies on an in-house review of business data to approve funding applications.
What Does it Mean?
While Shopify Capital is new in the Australian market, it has already made significant headway abroad.
The company’s Q2 2022 results, released in July, show merchants in the US, Canada, and the UK received a total of US$416.4 million ($604.6 million) over the period, a 15% jump from Q2 2021.
A total of US$3.8 billion ($5.5 billion) has been lent or advanced through Shopify Capital since its global debut in 2016, of which US$537.8 million ($781.1 million) was outstanding at June 30 this year.
🚀 Is it right for you? Well, it all comes down to rates.
Some people have expressed concerns that Shopify is offering expensive financing through Shopify Capital. As short-term lending goes, Shopify’s rates can be competitive, although you can expect a more demanding repayment schedule than you might be used to if you decide to accept an offer. Make sure to closely review any offers you receive and get a sense of how much of your sales will be held back to repay your debt. Keep in mind that your repayment amount will be a regular percentage, so when sales are high you can expect to pay down your loan faster, whether you really want to or not.