Repayment amounts decrease because they are tied to sales volume.
NOIR & BLANCO COMMUNITY
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If sales slow down, Shopify Capital repayments usually slow down as well, because repayment is generally based on a percentage of your daily sales rather than a fixed monthly installment.
Here’s how it works:
Repayments decrease when sales decrease. If your store has fewer sales or lower revenue on a given day, the amount automatically deducted for repayment is smaller.
Repayments increase when sales increase. During stronger sales periods, a larger amount is deducted because the repayment is calculated as a percentage of sales.
Cash flow can be easier to manage. Since repayments are tied to sales volume, merchants are not usually required to make the same large payment during a slow sales period that they would during a busy season.
For example, if your repayment rate is 10% of daily sales, a day with ₹100,000 in sales would result in a ₹10,000 repayment, while a day with ₹20,000 in sales would result in a ₹2,000 repayment.
However, it is important to remember that the funding still must be repaid according to the terms of your Shopify Capital agreement. A prolonged slowdown in sales can mean that repayment takes longer, and Shopify may have requirements related to minimum payment progress over time depending on the specific funding agreement.
In short, when sales slow down, Shopify Capital repayments generally become smaller because they are based on a percentage of sales, which can provide more flexibility than fixed monthly loan payments during slower business periods.