June 22, 2022

Why eComms should look beyond Shopify & PayPal for working capital

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If you're an online store owner, chances are you have been offered capital from one of your eCommerce providers on more than one occasion. The rise of short-term capital offers through platforms and payment providers have given founders a plethora of finance options to boost their business. Think Shopify Capital, PayPal Working Capital, Stripe Capital and Amazon Lending.

At face value, they appear easy to access. Relatively straightforward. And quick to process. But when considering your working capital options, what's right under your nose isn't always the best solution.

So, what are your options? Read on to find out why you should look beyond your eCommerce service provider for funding to scale your business.

Shopify Capital  

Renowned as one of the largest eCommerce platform providers in the world, Shopify Capital first hit the scene in 2016. The structure is simple: Shopify store owners are given a loan amount based on the business's revenue and earning potential. This is then repaid through a percentage of your daily sales until you've paid off the total amount.

While it's quick and easy to access, the loan amount you are eligible for is limited to the revenue you've made off the Shopify platform - and nothing else. This means any payments received outside your Shopify store (offline sales, invoices or alternative online platforms such as Amazon) will not be considered when looking at your business forecast. As a result, your loan amount will be significantly smaller than your funding potential.

It's also worth mentioning that Shopify Capital is limited to Shopify users only. If you're looking to potentially migrate platforms or would like the freedom to do so in the future, this is a key consideration before tying yourself to a provider.

PayPal Working Capital

Similar to Shopify, PayPal Capital gives small businesses funding for a fixed fee. The loan amount is dependent on your sales quantity and speed. If you have had a PayPal Business account for over three months and processed at least £9,000, you will likely qualify for an advance.

PayPal Working Capital requires just a single fixed fee to pay – there is no interest, no late fees, or fees due for any additional repayments. The amount of that singular fixed fee gets explained when you apply, and it differs for each business depending on the borrowed amount, your PayPal sales, and your target repayment.

A minor drawback: PayPal Working Capital is not the most flexible product, nor does it offer any benefits or advantages for early repayments. Even though repayments are a percentage of sales, it's less forgiving with a minimum repayment of at least 5% or 10% of your loan amount due every 90 days. If these payments aren't met, PayPal has the authority to deny you access to your funds until you've repaid. The product is also only available to PayPal merchants with specific requirements such as revenue. Meaning some small business owners may not be able to access these loans.

Amazon Lending

An invitation-only program, Amazon Lending offers short-term business loans to qualified sellers to bring more inventory to sell through the Amazon marketplace. These loans range from $1,000 to $750,000, and credit is not checked. On the surface, it looks a lot like a merchant cash advance: Amazon advances you a set amount of cash you pay back through a portion of your Amazon sales.

Since payment comes directly from a sale, it can be hard to see the full revenue that your business is bringing in. Also, compared to other providers, Amazon Lending can be slow to access: it takes an average of five days to review the request. And if you need any assistance, don't expect a speedy reply. Amazon's customer service team are notoriously difficult to access if you need help or would like to discuss your options.

Lastly, the most important thing to know about this funding route is that if funds run out and Amazon cannot recover their money, they can hold onto your inventory and restrict sales. After that, they can also take hold of your stock and sell it themselves to recover their funds.

Forward Advances

The alternative to the above options is turning to an independent provider specialising in revenue-based finance, such as Forward Advances. Similar to the mentioned options, the funding is interest-free. It's fast, without any lengthy paperwork, personal guarantees or collateral. And flexible: repayments can be either fixed or a percentage of incoming revenue to minimise risk over low seasonality.

Customer care and funding expertise are notable differences between platform providers and independent providers. Big corporate service providers have notoriously slow customer service with limited experts who can give transparent and friendly advice: both of which a funding specialist can provide. When you aren't sure what the best option for your business is, expert and independent advice is needed to make an informed decision. Some funding specialists, such as Forward Advances, aim to partner with companies and create a long-term relationship rather than a one-off finance transaction. And with this comes value-add services on top of funding. Think growth expert advice, easy-tops, repayment holidays, partner discounts and fast repayment incentives.

One of the biggest upsides of working with a funding provider: when forecasting your loan amount, all your revenue sources are taken into consideration. You can use Shopify. You can use Amazon. You can even have offline sales. No matter what the type or format of the revenue stream is, a funding provider takes all of this into consideration when building a tailored offer for your business. This could mean your offer may be larger than that from a single platform provider. And also flexes to work with what works best for your business. We understand that during uncertain times, you may need to diversify your revenue streams and explore new avenues. Breaking away from relying on a single platform gives you true flexibility and security. If your business operates on and is provided capital through a single provider, it creates a high risk for your business.


While it can be tempting to take the easy route and get funded through an existing eCommerce platform or payment provider, relying on one provider for your business operations and working capital is high-risk and limits your business's potential.

Online businesses considering short-term working capital to scale should look beyond their service provider to independent funding providers to benefit from transparent and low rates, 360 underwriting for loan offers, growth expertise and top-tier customer support.

Find out how much Forward Advances funding you could be eligible for here.

New to revenue-based financing? Check out our complete guide here.

Curious about our online application process? Find out here.

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