Managing payments for your Shopify Line of Credit

Understanding how payments work for your Shopify Line of Credit is essential for effectively managing your credit balance. This article will provide you with detailed information on the payment process, including automatic payments, early payment options, and tracking your payments.

Update on Shopify Line of Credit program

As part of our ongoing efforts to optimize the financial services we offer, Shopify is transitioning away from its Shopify Line of Credit offering. We are no longer accepting new applications for this program. Instead, we invite our merchants to explore Shopify Capital financing which remains Shopify’s primary lending solution for fast and flexible funding to support businesses of all sizes.

Key dates and guidelines for existing users

  • Continued access for current users: If you currently have an active Shopify Line of Credit, then you will be able to request new withdrawals up until December 31, 2024, at 23:59 PST.
  • Closure of new withdrawals: Beginning January 1, 2025, no further withdrawals will be permitted.
  • Repayment terms: Existing balances will still need to be repaid following the original 6-month repayment schedule outlined in your loan agreement. This process will be automatically managed through scheduled debits.
  • Specific repayment deadlines based on final withdrawal dates:
    • If your last withdrawal is between December 1, 2024, and December 26, 2024, then your repayment schedule will conclude on June 1, 2025.
    • If your last withdrawal is between December 27, 2024, and December 31, 2024, then your repayment schedule will conclude on July 1, 2025.
  • Flexible repayment options: You may also opt to make manual repayments at any time to potentially decrease both the total repayment amount and the duration of your loan.

Automatic payments and payment options

Payments for Shopify Line of Credit are automatically made over a period of six months, and are due on the first day of each calendar month in that period. This ensures a predictable payment schedule until the outstanding balance has been fully paid off. However, you also have the flexibility to make early payments at any time, which can help reduce the amount of interest owed.

Make a payment

  1. From your Shopify admin, go to Finances > Line of Credit.
  2. Click Make a payment to start the payment process.
  3. In the Make a payment dialog, in the Amount field, choose the payment amount from the provided options. You can select the next monthly payment amount or the full outstanding balance. Alternatively, click Other amount to customize your payment.
  4. After you enter the required details, click Next.
  5. In the Review and confirm payment section, carefully review the following information:
    • Total paid today
    • New outstanding balance
    • Estimated borrowing cost
    • Total amount owing
    • New payment schedule for the next six months
  6. After you review the payment details and are ready to proceed, click Confirm payment.

Settling and tracking payments

After you make a manual payment, a banner displays on your Shopify Line of Credit home page which states you submitted a manual payment towards your Line of Credit. Manual payments can take several business days to settle. In the Transactions section, the payment is displayed as Pending until it's settled.

After the payment settles, your available credit updates accordingly, and the Pending badge next to that payment disappears in the Transactions section. This means that those funds are available again for you to withdraw through your Shopify Line of Credit whenever you need them.

Partial payment of outstanding balance

When you make an early payment for a partial amount of the outstanding balance, that amount first goes towards your upcoming monthly payment amount. Any remaining amount is evenly distributed across your remaining payments.

Example 1: Early payment of a partial amount of next month’s payment due

A $6,000 USD withdrawal is made at the beginning of January, resulting in six payments of $1,000 USD principal per month plus interest to repay. In mid-February, you make a $500 USD manual payment.

The $500 USD payment is applied to the next month's principal payment amount of $1,000, reducing it to $500 USD. As a result, you pay less interest on payment due on March 1, which includes interest accrued in February. There are no changes to the remaining payments.

Before $500 paymentAfter $500 payment
Payment DatePrincipalInterestPrincipalInterest
February 1$1,000.00$99.93$1,000.00$99.93
February 16No payment made$500 payment made
March 1$1,000.00$83.28$500$79.17
April 1$1,000.00$66.62$1,000.00$66.62
May 1$1,000.00$49.97$1,000.00$49.97
June 1$1,000.00$33.31$1,000.00$33.31
July 1$1,000.00$16.66$1,000.00$16.66

Example 2: Early payment of an amount greater than next month’s payment due

A $6,000 USD withdrawal is made at the beginning of January, resulting in six payments of $1,000 USD principal per month plus interest to repay. In mid-February, you make a $3,000 USD manual payment.

The $3,000 USD payment is first applied towards the upcoming month's principal payment due on March 1, reducing the payment due to $0. Any interest accrued in February will then be applied evenly across the remaining monthly payments. The remaining amount from the manual payment is evenly distributed across all remaining payments. Therefore, the last 4 payments have all been reduced. This also lowers the interest owed for these months as the outstanding balance is lower.

Before $3,000 paymentAfter $3,000 payment
Payment DatePrincipalInterestPrincipalInterest
February 1$1,000.00$99.93$1,000.00$99.93
February 16No payment made$3,000 payment made
March 1$1,000.00$83.28$0.00$0.00
April 1$1,000.00$66.62$514.66$34.29
May 1$1,000.00$49.97$514.66$25.72
June 1$1,000.00$33.31$514.66$17.14
July 1$1,000.00$16.66$514.66$8.57
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