Working Capital
Editorial Team
At Working Capital, we believe access to funding should be simple, transparent, and designed around your business not the other way around. We’re committed to helping entrepreneurs make smart financial decisions with tools, guidance, and lending partners they can trust.
Securing funding can be one of the biggest challenges for a small business owner. Traditional working capital companies often require lengthy applications, strong credit histories, collateral, and financial documentation that growing businesses may not have. Even when financing is available, the process can be slow, leaving business owners searching for faster, more flexible ways to cover expenses, manage cash flow, purchase inventory, or invest in growth.
For businesses already operating through digital commerce platforms, financing options are increasingly being built directly into the tools they use every day. Square and Shopify both offer online loans for small business designed around merchant activity, using sales performance and platform data to determine eligibility rather than relying solely on traditional lending criteria.
Square provides financing and financial services for businesses that process payments through its ecosystem, while Shopify offers capital and financial products designed for merchants selling through its ecommerce platform. Both platforms aim to simplify access to business funding, but they differ in loan structures, repayment models, available products, and how they support business owners beyond financing.
The Square Credit Card is a business credit card offered to business owners using Square. Issued on the American Express network, the card can be used anywhere American Express is accepted and is fully integrated with Square’s payments, banking, and business management platform.3
Access to the card is limited to merchants selected through Square’s evaluation of payment processing history and transaction volume. A merchant’s available credit is tied to its Square transaction volume and may increase as the business processes more sales through the platform.3
Square keeps pricing simple by charging no annual fees, foreign transaction fees, or late fees. Businesses earn a flat 1% reward on all eligible purchases, with no earning cap. But instead of cashback or travel points, rewards are credits toward future Square payment processing fees.3 Because rewards are tied directly to Square’s payment ecosystem, the card provides the greatest value to businesses processing payments frequently through Square and is less appealing for merchants seeking traditional cashback or travel rewards.
As part of the Square ecosystem, the Square business credit card for small business connects with the Square dashboard, giving owners a centralized place to manage spending, payments, sales activity, and banking tools.3 This feature also streamlines payment collection, allowing Square to automatically collect the amount due through the platform.
Shopify Credit gives eligible Shopify merchants access to a business Visa card built for managing everyday company expenses. The card is available by invitation only and does not include an annual fee. Rewards are tied to spending categories, with cardholders receiving 3% cashback in a selected category and 1% cashback on purchases in two other categories of choice.8
Unlike a traditional credit card that may allow balances to roll indefinitely, Shopify Credit is structured primarily as a pay-in-full product. Merchants are generally expected to clear their statement balance each month. For businesses that need additional time to repay certain purchases, Shopify provides an option to spread payments over a period of up to 10 months. This extended repayment option follows a sales-based payment structure and includes an added fee.8
Shopify Credit is part of Shopify’s broader financial product lineup, but cannot be combined with Shopify Capital. Merchants with an active Shopify Capital loan are not eligible to use Shopify Credit simultaneously and must select the option that best fits their current financing needs.8
Square offers financing to eligible merchants through its Square Loans program, which is available only to businesses using Square for payment processing. Businesses cannot apply for funding when the need arises because financing is available by invitation only.
Square’s internal underwriting model continuously evaluates merchants, considering factors such as payment processing history, sales volume, and overall account performance. Businesses that qualify may find a pre-approved loan offer waiting in the Square Seller Dashboard. Loan terms are predetermined by Square, leaving businesses with the option to accept or decline the offer.1
While larger offers (up to $350,000) are generally reserved for merchants processing higher sales volumes, smaller businesses may still qualify for more modest financing amounts (starting at $100). Square determines eligibility based on its own business performance data. It does not perform a personal credit check, require a personal guarantee, or ask for business collateral.1
Square’s no-collateral small business loans do not carry a traditional interest rate. Instead, each includes a one-time fixed fee established when the offer is issued. Before accepting the loan, borrowers can see the total repayment amount, which includes the original loan plus the fixed fee. Because the fee is fixed upfront, the total amount owed never changes, even with early repayment.1
Repayment is revenue-based and occurs automatically through the merchant’s Square account. Square deducts a predetermined percentage of daily Square sales processed through its platform until the full repayment amount has been collected.1 Because repayments are tied to sales volume, payment amounts increase during stronger sales periods and decrease during slower periods.
Even though repayment amounts fluctuate with revenue, borrowers must repay at least 1/18 of the original loan amount every 60 days, and the full balance must generally be repaid within 18 months.1
Shopify Capital is a financing option available to businesses that sell through Shopify. Shopify evaluates businesses through their activity history on its platform. Loan availability, amounts, and terms are determined using Shopify’s internal analysis of store performance, including sales patterns, transaction history, customer activity, order volume, and business performance. Financing offers are presented directly within the Shopify Admin.7,8
Because financing is invitation-based, merchants cannot apply independently. Financing is available to qualifying Shopify businesses in supported markets, including the United States, Canada, Australia, and Germany.7
Offer amounts are based on individual business performance, with available funding amounts and repayment terms presented within Shopify Admin before a merchant accepts an offer. Once an offer is accepted, funds are deposited into the merchant’s linked bank account.7,8
One of the key differences between Shopify Capital and other financing programs is the availability of two repayment cost structures.
Under both fee structures, repayment is connected directly to Shopify sales activity. Merchants repay through automatic deductions based on a percentage of daily Shopify revenue. The amount collected changes with sales volume. Higher sales result in larger deductions, while slower periods require smaller payments. However, Shopify requires businesses to meet minimum repayment milestones during each of the first two six-month periods, and repayment cannot extend beyond the program’s maximum 18-month term.7
Shopify Capital is designed to reduce many of the requirements associated with traditional business lending. Shopify evaluates eligibility for short-term working capital loans based on factors such as a merchant’s sales performance, account history, and business activity on the Shopify platform rather than relying solely on traditional lending criteria.8 However, Shopify may place a lien on business assets in certain situations.7
Square does not offer a traditional merchant cash advance product. Instead, eligible Square sellers can access financing through Square Loans, a sales-based financing option that uses a repayment model similar to revenue-based financing. Businesses receive funding offers based on their Square payment processing history, and repayment is collected automatically as a percentage of daily Square sales.1
Because repayment is tied to sales activity, payment amounts fluctuate with revenue. Merchants repay more during stronger sales periods and less when sales slow, allowing repayment to adjust with business performance rather than requiring a fixed monthly payment. Square determines the repayment percentage and loan terms upfront, and merchants can review the total repayment amount, before accepting an offer.1
Square Loans are available only to businesses using Square for payment processing. Eligibility is based on factors such as payment volume, account history, and overall business performance, rather than a traditional application process.1 While Square’s model shares similarities with merchant cash advances, Square structures the product as a loan rather than a purchase of future receivables.
Shopify Capital offers merchant cash advances (MCAs) to eligible merchants in select markets, including Ireland, the Netherlands, Spain, and the United Kingdom.8 Unlike a traditional loan, the merchant cash advance is structured as a purchase of future sales receivables. Eligible merchants receive a lump sum of funding in exchange for a percentage of future sales until the agreed total amount owed has been satisfied.10
Shopify Capital does not allow merchants to apply for a merchant cash advance at any time. Instead, eligible businesses receive funding options through Shopify Admin based on their store activity and eligibility. Merchants can review available funding options, including the amount received and the total cost to borrow before accepting an offer.10
Repayment is tied directly to sales performance rather than a fixed payment schedule. Shopify automatically collects a predetermined percentage of daily sales until the agreed total amount has been satisfied. Because payments are based on sales activity, merchants pay more during stronger sales periods and less when sales slow.10
Shopify Capital’s merchant cash advance is designed for businesses that want access to working capital while aligning repayment with revenue. Because repayment adjusts with sales activity, merchants do not make a fixed payment amount each day; instead, payments fluctuate based on the performance of the business.10
Square Business Checking is a banking option designed for merchants that use Square as their payment processing platform. The account integrates with Square’s broader business tools, allowing financial activity to connect with the company’s payments and merchant services ecosystem. There is no monthly fee or minimum balance associated with this account.2
Merchants who process payments through Square can have sales proceeds deposited into their checking accounts for faster access to funds. A connected debit card allows business owners to use those funds for everyday business expenses, while the Square dashboard brings together payment processing, sales tracking, banking features, and Square Credit Card management in a single location.2
Square Business Checking also provides faster access to Square Loan funding. Merchants with a Square account can receive approved loan proceeds instantly. Businesses without an account typically receive funds by the next business day.1
Shopify Balance is a business account designed to help merchants manage their broader financial activities alongside their sales. Built into the Shopify platform, it helps merchants manage funds, expenses, and store-related finances from the same environment they use to operate their business.9
Shopify Balance is available to U.S. merchants with no monthly fees and no minimum balance requirement. Account holders also gain access to a Shopify Balance Visa® card, which allows them to make business purchases using funds in their account. This Visa card offers cashback rewards on eligible spending.9
Shopify Balance also connects with other Shopify financial products, including Shopify Capital and Shopify Credit, so merchants can manage financing offers and track loan repayment activity through the Shopify dashboard.9 However, businesses looking for traditional banking services, such as access to branch locations locally or more commercial banking capabilities, may find that a traditional bank account may be a better fit for their needs.
Access to capital is only one part of the financing decision. For small business owners, the more important question is whether the structure of the financing aligns with how the business earns revenue and manages cash flow. A loan that fits one business model may not be the right fit for another.
Square and Shopify take a similar approach by using merchant activity to create financing opportunities within the platforms that businesses already rely on. Rather than functioning as a traditional working capital loan company, each offers financing as part of a broader business ecosystem.
This structure can make funding more accessible for eligible sellers, but it also means the financing is closely tied to each platform’s services. Businesses should consider not only the amount of capital available but also the repayment model, total cost, available financial tools, and how each option fits into their broader operations.
Ultimately, the best financing decision comes down to the terms behind the offer and how the funding will support the business’s next stage of growth.
1https://squareup.com/us/en/banking/loans
2https://squareup.com/us/en/banking/checking
3https://squareup.com/us/en/banking/credit-card
4https://www.shopify.com/capital
5https://www.shopify.com/news/capital
6https://help.shopify.com/en/manual/finance/shopify-capital/united-states
8https://www.shopify.com/credit
9https://www.shopify.com/balance
10https://help.shopify.com/en/manual/finance/shopify-capital/united-kingdom
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