Shopify Capital adds small, unsecured loans for ‘dorm room' entrepreneurs

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Shopify has provided merchant cash advance services for the last three years for established online retailers, but newcomers with no transaction history typically were turned away.

To bridge that gap, Shopify has expanded its Shopify Capital services to include micro-loans as small as $200 to new e-commerce entrepreneurs who agree to use the online selling platform provider’s Shopify Payments services.

Shopify will extend loans to budding e-commerce operators with no credit or payment history or collateral, Ottawa, Canada-based Shopify announced on Tuesday.

“If you’re a student launching an e-commerce business in a dorm room, no bank is going to give you money, but with $200 you can buy an ad on Facebook and make your first sale,” said Kaz Nejatian, vice president and general manager of Shopify Financial Solutions, in an interview.

Shopify sees its no-strings loans as low-risk, according to Nejatian.

“We're willing to bet that most small businesses will grow,” Nejatian said, noting that Shopify's platform supports more than one million online retailers, most of which started small.

Shopify Capital also provides merchant cash advances and loans of up to $1 million to online retailers with health payments track records, with the requirement that borrowers must use its Shopify Payments online checkout services, which the e-commerce platform introduced in 2013.

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