About Shopify Financing
Shopify is a popular platform for eCommerce sellers. In addition to the ability to fully customize your online storefront, Shopify offers sellers a number of relevant tools to ease their selling experience. In addition, Shopify gives sellers the ability to implement an omnichannel strategy, not limiting their sales to the internet.
Like many eCommerce businesses, however, Shopify sellers often need financing in order to keep their stores in stock, grow their businesses, and cover the day-to-day expenses that arise. Since supply chain costs from manufacturing to warehouse storage fees must be paid before they even have inventory on hand to sell, they often lack sufficient working capital.
Shopify Financing Opportunities
As with eCommerce sellers on all platforms, Shopify sellers often need extra funding to stay in stock and reach their growth goals. Running into cash flow problems is all too common among Shopify sellers, since they have many supply chain costs that must be paid before they get inventory in stock to sell.
There are many financing options available to Shopify sellers, including Shopify’s own funding solution: Shopify Capital.
Shopify Capital
Shopify Capital is Shopify’s answer to their sellers’ need for more cash flow. Since it’s built for Shopify sellers, it works with Shopify stores, eliminating the need for long applications or paperwork. Shopify sellers can log on and check their eligibility quickly, based on their store performance. There is no credit check and no personal guarantees are required, and Shopify doesn’t take any equity in your business.
If Shopify finds that you are eligible for Shopify Capital, you can receive up to $2 million in funding, which you pay back as a percentage of your daily sales. These payments are deducted automatically from your revenue on Shopify, so you don’t need to worry about sticking to any sort of payment schedule.
This is a great solution for many Shopify sellers since their repayments directly reflect their sales. However, Shopify determines how much funding you are eligible to receive, and giving back a percentage of your sales every day quickly cuts into your profit margin. In addition, only Shopify sellers are eligible for Shopify Capital.
Debt financing
When people think of funding solutions, they often think of debt financing first. Debt financing is when you borrow money from a lender and pay it back over time with interest. Bank loans, lines of credit, and even merchant cash advances are all examples of debt financing that may be available to Shopify sellers in search of financing.
Many people choose debt financing for their funding needs because they don’t have to give up any equity in their business in exchange for funds. Shopify sellers and other eCommerce businesses can get access to capital relatively quickly, and with all of the options available, they can choose a loan type with an interest rate and repayment schedule that suits their unique needs. In addition, repaying debt financing is a great way to build your credit score, making you eligible for even larger sums of money in the future.
Debt financing comes with downsides, too. It can be difficult to qualify for loans and lines of credit if you don’t have a high credit score or haven’t had the chance to build up your credit. They may also have long and in-depth applications, and some lenders require that you put up personal guarantees or collateral in the case you fail to repay your loan. In addition, the rigid repayment schedule that comes with debt financing may be challenging for certain businesses, especially those with seasonal sales or fluctuations in demand.
Crowdfunding
Crowdfunding is another way that Shopify sellers can finance their stores. In this method of financing, businesses can raise a large sum of money through many small investments from individuals. Each investor decides which projects or business ventures to fund and can then provide as much or as little capital as they choose.
One of the benefits of crowdfunding is that funded businesses usually do not have to repay the investors who gave them money for their project or idea. Instead, they can either give them equity in their company (known as equity crowdfunding), or some sort of gift or reward. This depends on the crowdfunding platform and agreement they choose.
There are many popular crowdfunding platforms out there such as Kickstarter, GoFundMe, and Indiegogo on which business owners can publish their ideas. Investors browse through these projects and choose which one they want to fund. However, building a crowdfunding campaign takes a great deal of time and hard work, and even then, there’s no guarantee that your business idea will be successfully funded.
Equity financing
Another funding option for those in need of Shopify financing, equity financing is the selling of a portion of a business’s equity in exchange for capital. When people talk about angel investors and venture capital, they’re referring to equity financing.
In order to secure this type of financing, entrepreneurs seek out investors who believe in their business and are willing to give them money in return for a minority share in the company. This often comes with a portion of future profits, too. Many angel investors and venture capitalists specialize in a particular industry, and bring with them both a network of connections as well as expertise that can help you grow your business.
While equity financing is a great way for Shopify sellers to get much-needed money for their businesses, many business owners do not want to give away a portion of ownership. Plus, it can be challenging to find equity financing that fits your business needs.
Grant
If you’re looking for a way to secure some money for your Shopify store that you don’t have to pay back, a grant might be a good option for you. Grants are most often given out by government agencies, but private organizations can also offer grants to businesses. They are usually given out to encourage performance in a certain area, or to further a specific goal.
In order to qualify for a grant, you must first find one that is relevant to you and your business. There is a limited number of business grants available, and they are often earmarked for specific types of entrepreneurs or businesses. Once you identify a grant that looks like a good fit, you need to apply for the grant. Each grant has different application processes and requirements, and they can be lengthy.
Once you apply, all that’s left to do is wait for a decision. Grants can be very competitive and difficult to acquire. There is also not necessarily a grant that will be relevant to you or your business idea.
Revenue-based financing
Since Shopify sellers often have to deal with the uncertainty that comes with running an eCommerce business, revenue-based financing is a great option for them. Revenue-based financing is a funding method in which a business receives a sum of capital in exchange for a percentage of future revenue.
Instead of a fixed repayment schedule like with a bank loan or line of credit, the investor gets a decided-upon portion of revenue for a set period of time or until a certain amount of money is reached. This is ideal for businesses that have seasonal sales, or those with fluctuating demand. Many Shopify sellers prefer this method of financing because they don’t have to worry about a high monthly payment when sales are down. On the other hand, revenue-based financing is often more expensive than traditional methods of financing.
Merchant cash advance
A merchant cash advance, or MCA, is similar to revenue-based financing. Instead of paying back the investment as a set percentage of revenue, however, you give a percentage of credit and debit card sales directly to the funder.
This type of financing is relevant for businesses that accept credit card payments from customers. It’s very helpful for eCommerce businesses, since they don’t have to commit to large monthly payments that they may struggle to pay during slower sales seasons. Most MCA providers don’t require a credit check, instead basing their funding on your business’s performance.
As with any type of funding, there are downsides to an MCA, too. Giving up a percentage of credit card sales brings down your profits significantly, which might be challenging for some businesses. In addition, MCAs tend to be relatively expensive compared to traditional funding methods.
Invoice factoring
Invoice factoring is a great way for businesses with long payment periods to get fast capital and keep their cash flow stable. You can sell your outstanding invoices to an invoice factoring company, in exchange for a percentage of the value up front. This ranges depending on your agreement, but can be as much as 80-90%. Then, the factoring company collects the full payment from the customer. Once they receive it, they transfer you the rest of the balance, minus a fee for their service.
This type of financing is a great solution for businesses that struggle with the gap in time between making a sale and receiving revenue. Invoice factoring solves this problem, but for a cost. It tends to be more expensive than some other funding options. Plus, depending on your agreement, you may still be responsible for the invoice if your customer fails to pay up. So make sure to do thorough research and read your contract carefully if you choose this type of financing for your Shopify store.
8fig Financing for Shopify
There’s another Shopify financing option available to sellers on the platform: 8fig! 8fig is a unique funding and growth platform that allows Shopify sellers to plan, manage, and fund your business. In addition to continuous, flexible funding, 8fig gives you the tools you need to plan your supply chain, optimize your cash flow, and grow your business up to 2.5x as fast.
Why use 8fig for Shopify financing
8fig funding is not like any other financing solutions out there. Instead of one lump-sum payment, 8fig infuses continuous capital into your business right when your supply chain needs it most. This ensures maximum cash flow and growth potential. It’s also flexible, which means you can change any aspect of your plan from your funding amount to your remittance schedule.
How 8fig works
1. Apply
The application process is fast and easy. Answer some questions about your business and sales, and then provide basic information about your supply chain stages and expenses.
2. Connect your store and bank account
In order to provide you with an optimized Growth Plan, 8fig requires that you connect your store and bank account to the 8fig platform.
3. Get funded
With 8fig, you can get funded in just days. Since 8fig funding is continuous, you receive capital infusions into your business right when you need it.
4. Make adjustments
If something changes and you need to adjust your payments, remittance schedules, or even funding amount, you can always do so thanks to 8fig’s flexibility.
5. Grow your business
All that’s left to do is sell, sell, sell. With 8fig, businesses are able to scale 2.5x as fast.
What 8fig offers in addition to financing
One of the most important things that sets 8fig apart is that we offer more than Shopify financing – we provide you with the tools you need to optimize your cash flow, analyze your sales, and reach your growth goals. That’s why we call ourselves a growth partner. Our platform is built to give you everything you need to achieve growth, from supply chain mapping and planning software to sales analytics and benchmarks.
Who is eligible for Shopify financing from 8fig
8fig’s eligibility requirements are minimal compared to other Shopify financing options. If you are an eCommerce seller with at least 12 months of trading history, over $100,000 in revenue over the last year, and an average of $8,000 in sales per month for the last three months, you are eligible for 8fig funding.
The application process is fast and easy, and you can receive funding in as little as days. There is no credit check and 8fig funding is equity-free. You keep full control of your business and decide how you want to spend your funding.
How to apply for 8fig financing
It’s easy to apply for 8fig financing, and it only takes a few minutes. Simply answer the questions and follow the prompts and you’ll get funded in no time!