In an effort to enable small business startups to finance their goals and ambitions, Shopify Capital will now offer starter loans.
Providing merchants with an initial amount of $200, starter loans are available to Shopify merchants who already use Shopify Payments. The loans are part of the Shopify Capital suite enabling other types of merchant financing, according to the company’s post.
According to Forbes, the starter loans are available to qualified sellers who sign up for Shopify and link their bank accounts, with no credit checks needed. Sellers pay back their loans as a percentage of their sales every 60 days.
Merchant financing is a growing trend that keeps gaining traction and showing promise for payments providers. Many payments brands have ventured into this market segment and continue to enhance their product offering, including PayPal, Alipay, Square, Paysafe and Grab.
As PaymentFacilitator has previously reported, many providers are drawn to lending in part because they are already so heavily integrated into their submerchants’ businesses with a deep knowledge of their payments activity, they are able to offer financing without any credit checks, business plans or subsequent financial data.
Shopify Financial Solutions Vice President and General Manager Kaz Nejatian touted the simplicity of qualifying for the loans to Bank Innovation as one of the primary benefits of this new product offering. “The idea here is to make it a little bit easier to buy your first marketing campaign, or buy your first inventory,” he said.
“Open up a store, link your bank account and you qualify after the first month for your loan. You don’t need to have a business plan, you don’t have to have any sales information and you don’t need to give a personal guarantee or your income,” Nejatian said.
Being an already-integrated part of the funding flow can also help recovering loan payments easier. And the fact that PFs often offer a range of business services to their submerchants can make marketing a lending product easier as well.
“Shopify is all about encouraging people to start businesses in 2020,” Nejatian told Forbes. “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.”