Shopify Capital: E-commerce giant to offer loans of up to $2.5 million to Australian businesses

E-commerce platform Shopify has introduced a new business financing product to the Australian market, offering up to $2.5 million in funds repayable as a percentage of future sales.

Dubbed Shopify Capital, the Canadian e-commerce titan states the new financing facility is designed for existing Shopify users turned off by traditional bank business lending.

Opposed to loans repayable with interest, Shopify Capital repayments are built on a per-sale basis, with remittance paid by businesses as a percentage of each day’s takings.

The company claims it does not utilise personal credit checks or take equity in the businesses it lends to, instead relying on in-house review of business data to approve funding applications.

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.

The announcement of Shopify’s boosted financial offerings comes just weeks after the company announced a 10% reduction to its global workforce, a response to lower-than-expected e-commerce sales once the harshest COVID-19 lockdowns came to an end.

Taking to LinkedIn, chief executive Tobias Lütke said the “bet” that e-commerce retail “would permanently leap ahead by five or even 10 years” did not pay off for the company.

In its Q2 2022 financial statement, Shopify intimated that its merchant solutions, including capital, will continue to increase as a percentage of the total dollar value of orders processed through the Shopify platform.