Loans will be offered through Shopify Capital, giving new merchants $200 when they join Shopify and link a bank account.
“For the immigrant who is new in the country, the student in the college dorm and the mom who has been out of work for awhile the starter loan makes it a little bit easier,” said Kaz Nejatian, vice president and general manager of Shopify Financial Solutions. “That $200 can get you your first Instagram ad or logo. We’re really leveling the playing field.”
Nejatian said $200 “may not seem like a lot,” but Shopify has witnessed startups launching with only $200 and becoming multi-million dollar firms.
Entrepreneurs don’t need a personal guarantee or credit check to get the loan. The funds are paid back in 60 days as a fixed percentage of sales. And if the eCommerce merchant fails to make money, Shopify won’t demand payment. Most borrowers will have an interest rate in the low teens.
“You need to have a Shopify business or use Shopify Payments,” said Nejatian. “It’s designed to be the most merchant friendly funding mechanism to start a business.”
He added that the majority of small business startups “don’t have a five-year plan and have terrible credit scores. It limits the pool of enterprises starting businesses.”
Since Shopify Capital launched in April 2016, it has made in excess of $750 million in loans. Shopify is hoping startups will use the money to start the next million small businesses.
“Shopify is all about encouraging people to start businesses in 2020,” said Nejatian. “We lowered the barriers for small businesses, making it really easy to set up an online store, making it easy to ship and now we want merchants to start businesses as easily and quickly as possible.”
In May, Shopify acquired B2B eCommerce portal Handshake. In April, Shopify teamed up with Snap to boost merchants’ marketing plans and purchase Snapchat Story ad campaigns on the Shopify platform.