Square Loans and Shopify Capital basically work the same way: the platform you sell on offers you a loan based on your sales, charges a fixed fee instead of interest, and collects the repayment as a fixed portion of your daily sales. The differences lie in size and fit. Square offers businesses that accept card payments through Square $100 to $500,000, while Shopify Capital offers online stores up to $2 million on a Shopify plan with a maximum term of 18 months and published minimum repayments. Which one you can use depends mostly on where you already sell.
For more information about each lender, see our Square Loans review and our Shopify business loans guide. For more side-by-side comparisons, visit the Lender Ratings Hub. Figures below are from each company’s website unless otherwise noted.
Square Loans vs. Shopify Capital at a glance
The figures were verified on September 21, 2026. Prices are shown as provided by each company.
| Square Loans | Shopify Capital | |
|---|---|---|
| Who can get an offer? | Seat seller, by invitation | Shopify merchants based on store sales |
| Loan amount | $100 to $500,000 | Up to $2 million |
| Prices as stated | A flat fee for the loan; no interest | Depending on the offer, fixed fee or fixed monthly fee |
| repayment | Fixed percentage of daily card sales plus the minimum payments listed in your offer | Fixed percentage of daily sales, only on days you make sales |
| Maximum runtime | Not stated by Square; NerdWallet (third party) reports 18 months | 18 months |
| Minimum payments | Bet on your offer; NerdWallet (third party) reports one-eighteenth of the loan every 60 days | 30% of the total until the 6th month and 60% until the 12th month |
| Authorization signals | It is more likely if more than $10,000 is processed in a year and Square was used for at least 20 days in the last year | Active Shopify plan and 3+ months of operation; Shopify Payments or an approved third party |
| Credit check | The application has no impact on your credit score. Every application is subject to a credit check | “No credit check, no impact on your personal creditworthiness” |
| Collateral and guarantee | None under $100,000; can file a UCC lien for $100,000; $250,000 Personal Guarantee | “No personal liability” |
| speed | Next business day or immediately with Square Checking (help says 1 to 3 business days) | If approved, within two working days |
| Lender | Square Financial Services, Inc., a Utah-chartered industrial bank owned by Block, Inc. | WebBank |
How each one works
Both are loans from a bank that are brokered via the platform. “All Square loans are originated by Square Financial Services, Inc., a Utah-chartered industrial bank” (Square Support), a wholly owned subsidiary of Block, Inc. On the Shopify side, “all financing through Shopify Capital in the United States is originated by WebBank” (Shopify Help Center).
Both decide primarily based on your sales data on the platform. Square says its loans are “offered by invitation” and checks accounts daily for offers (Square Eligibility FAQs). Shopify uses “machine learning to analyze data about your business, including your sales, disputes, and customer loyalty” (Shopify Capital). You cannot apply for a loan without a Square invitation.
What each one costs
Both calculate a fee instead of interest. A fixed fee is a dollar amount that you agree to in advance; it doesn’t grow over time like interest does. This makes the total cost easy to see, but it is not APR (annual percentage interest rate), which spreads the costs over the time you have the money. The faster you pay back a fixed fee, the higher the APR.
Square offers “no interest, just a flat fee” and says, “The total cost of the loan is simply the loan fee, which is the difference between the total amount owed and the original loan amount” (Square Loans). When you select a loan amount on the quote screen, “the fee and hold rate will adjust accordingly.” Due to the advance payment, the costs do not change and no late payment interest is incurred.
Shopify offers two structures. With a fixed fee, you pay a fee for the life of the loan, and “even if you pay off the entire balance, the cost of finance remains the same.” With a monthly fee, you’ll be charged a fixed dollar amount each month, so paying it back sooner will cost less.
Neither company publishes a fee range, so the price shown is determined by your offer. Ask for the total repayment amount and the retained daily sales share and record both in writing.
Worked example: Shopify’s own $100,000 examples
Shopify’s Help Center shows a $100,000 loan with a 13% fixed fee that will cost $13,000 whether you pay it off in 3 or 11 months. The same $100,000 with a monthly fee of $1,400 will cost $4,200 if paid back in 3 months or $15,400 if paid back in 11 months. The fixed fee costs less if it takes longer to repay; The monthly fee costs less if you pay it back quickly. Square’s flat fee works like Shopify’s fixed fee: the dollar cost stays the same no matter how quickly you repay.
Who is qualified?
Square Loans
- Businesses that processed at least $10,000 in a year and used Square for at least 20 days in the last year “are more likely to be eligible.”
- Square also considers payment frequency, customer mix, disputes, reserves and failed bank withdrawals. Every application is subject to a credit check.
- Starting in August 2026, businesses that sell CBD products or services will no longer be eligible for new Square credits.
- One active credit per location.
Shopify Capital
- An active Shopify plan and a store that has been in operation for at least three months or a first sale more than three months ago (Shopify eligibility).
- Shopify Payments or an approved third-party payment provider.
- Offer size is “based primarily on your sales performance on the Shopify platform.”
- You may be eligible for a second loan before the first is fully repaid.
Choose Square Loans if…
- They already accept card payments through Square.
- You’ll need a small amount: Square offers start at $100.
- You want to deposit the money into Square Checking the next business day or immediately.
- For a loan of $100,000 or less, you would prefer not to put up any collateral.
Choose Shopify Capital if…
- You sell online through a Shopify store that has been running for more than 3 months.
- You need more than $500,000. Shopify rises to $2 million.
- You don’t want a credit check and you don’t want any personal liability.
- You plan to repay quickly and get the monthly fee option that costs less the sooner you pay.
If you sell through both, you may see offers from both. Compare total repayment and daily retention, not just the loan amount. Our list of Shopify Capital alternatives includes options outside of both platforms.
Pitfalls to be aware of
- Minimum amounts continue to apply in weak months. Both receive a share of the daily turnover, but also set minimum amounts. Square may increase the repayment rate and charge your Square balance or bank account if you miss a repayment. Shopify says that missing the 30% and 60% levels “could result in a default.”
- Paying it off early may not save you money. Square’s flat fee and Shopify’s fixed fee remain the same with early repayment.
- Your platform is tied to the loan. The repayment comes from sales on this platform. Therefore, changing the processor must be planned while there is an outstanding balance.
- No credit building. Square says it doesn’t submit reports to third-party credit reporting agencies, so repaying them on time won’t help build your business credit file.
FAQ
Is Square Loans or Shopify Capital cheaper?
It depends on your offer. Compare the total repayment for offers of the same size and take into account how quickly you expect to be repaid.
Will my creditworthiness be checked?
Shopify says “no credit check.” Square says applying won’t affect your credit score, although every application is subject to a credit check.
Can I apply if I haven’t received an offer?
No. Square loans are invitation-only, and Square checks accounts daily for new offers. Shopify bases eligibility and listing size on your store’s sales on its platform.
How long do I have to repay?
Shopify’s maximum term is 18 months. Square lists the due date and minimum amounts in your offer, not on its website; NerdWallet, a third-party review site, reports 18 months.
Next step
If you would like to see how a platform offering compares to other financing, SMB Compass can help you compare options from the lenders we work with. Get started with our guide to revenue-based eCommerce financing or business loans.
Sources
- Square: Square loans
- Square Support: Get started with Square Loans
- Square Support: Eligibility FAQs
- Square Support: Repayment FAQs
- Shopify: Shopify Capital
- Shopify Help Center: Shopify Capital in the United States
- Shopify Help Center: Shopify Capital eligibility
- NerdWallet (Third Party): Review of Square Loans (updated January 13, 2026)
About this page. Written by Ezra Cabrera, Content Team Lead at SMB Compass. The figures were reconciled with each lender’s website on September 21, 2026; Lenders change their terms. Therefore, please check the current conditions before applying and let us know if you notice a number that has changed. SMB Compass is a corporate finance broker: we do not lend our own money and are paid by the lenders we lend from. This site provides general information and does not provide financial, legal or tax advice.
This article is for general information purposes only. This does not constitute financial, legal or tax advice, nor does it take into account your company’s specific situation. Interest rates, terms and requirements change and vary by lender. Before making a financing decision, speak to a qualified financial advisor, accountant or lawyer. SMB Compass is a business financing company and not a direct lender.
