Average ecommerce effective borrowing cost in 2026: bank lines 9%, Shopify Capital 20-50%, MCAs 60-90%+ (by revenue band)

We get a version of this question every week from $2M to $30M ecommerce founders. Wayflyer or Shopify Capital just emailed me a $300K offer at a 9 percent fee, is that cheap or expensive. The honest answer is that the fee is not the price. The price is the fee divided by how fast you have to pay it back, annualized. That conversion is where an 8 percent fee becomes a 32 percent effective APR and where a $300K offer that looks cheap turns into the most expensive money on your balance sheet.

This post lays out what your brand can actually borrow at in 2026, by lender type and revenue band, with the Prime rate at 6.75 percent (FRED DPRIME, May 2026) and Shopify Capital deploying $1.4B in Q1 2026 alone. The whole borrowing-cost ladder spans roughly 7x: bank lines at 8 to 10 percent at the floor, traditional broker merchant cash advances (MCAs) at 60 to 90 percent at the ceiling. Where you sit is mostly a function of revenue band, not credit score.

Why "5 percent fee" does not mean "5 percent APR"

The math operators rarely run goes like this. You borrow $100K from Wayflyer or Shopify Capital at an 8 percent flat fee. You pay back $108K. Your effective APR is not 8 percent, it is roughly (8 percent / repayment months) x 12.

If you pay it back over 3 months, that is 8 percent / 3 x 12 = 32 percent APR. Over 6 months, it is 16 percent APR. Over 9 months, it is roughly 11 percent. Over 12 months, it is 8 percent (the headline fee).

For daily-remittance products like Shopify Capital, Wayflyer, Clearco, PayPal Working Capital and Stripe Capital, that is the right rule of thumb. Daily remittance means the lender pulls a fixed percentage of your daily sales (typically 10 to 30 percent) until the advance is repaid. The faster your sales, the faster the payback, the higher the effective APR.

For term loans (SBA 7(a), bank lines), the math is different because principal amortizes on a schedule and your average outstanding balance is roughly half the original. The effective APR is closer to the stated interest rate.

The Truth in Lending Act (TILA) does not require APR disclosure on MCA products because they are legally structured as future-receivables purchases, not loans. That is why every Shopify Capital, Wayflyer and Clearco offer you see quotes a factor rate or flat fee, never an APR. The operator has to do the conversion. We have not yet met a founder who runs that math before they sign.

The 2026 borrowing cost ladder by lender type

The Bank Prime Loan Rate is 6.75 percent as of May 2026, down from the 8.50 percent peak in September 2024 (FRED DPRIME). The Fed cut 175 bps between September 2024 and December 2025. For qualified ecommerce borrowers, bank lines reset to roughly Prime + 1.5 to 3.0 percent, so 8.25 to 9.75 percent all-in. Business credit card APR sits at 21.00 percent (FRED TERMCBCCALLNS, Feb 2026) and has been functionally flat for two years.

The chart is the full ladder. Bank lines and SBA 7(a) cluster at 8 to 11.5 percent. Asset-based lending (inventory + accounts receivable as collateral) sits at 10 to 15 percent. Amazon Lending has a wide range (8.99 to 36 percent depending on the underwriting partner: Lendistry, Slope, QuickBooks Capital). Then the fintech MCA tier (Clearco, Wayflyer, Shopify Capital, PayPal/Stripe Capital) runs 15 to 60 percent. Business credit cards sit at 21 to 29 percent. Traditional broker-channel MCAs run 60 to 90 percent.

Lender type	Low APR	High APR	Notes
Bank line of credit (Prime + 1-3%)	8.25%	9.75%	Requires audited financials; 6-12 month review cycle
SBA 7(a) loan (Prime + 2.25-4.75%)	9.00%	11.50%	Personal guarantee; 7-10 year term; collateral needed
Asset-based lending (inventory + AR)	10.00%	15.00%	Secured by inventory and receivables; revolving
Amazon Lending (range across partners)	8.99%	36.00%	Invite-only; no public APR disclosure pre-offer
Clearco MCA (6-12% fee)	15.00%	45.00%	Capped at 30% of weekly revenue
Wayflyer term loan (5-10% fee, 3-9 mo)	15.00%	50.00%	APR scales inversely with repayment speed
Shopify Capital (factor 1.10-1.17, 6-mo)	20.00%	50.00%	6-month median repayment; daily auto-deduct
PayPal / Stripe Capital (factor 1.01-1.58)	15.00%	60.00%	Auto-deduct from payment processing
Business credit card	21.00%	29.00%	FRED TERMCBCCALLNS Feb 2026 average: 21.0%
Traditional MCA (factor 1.30+, 5 mo)	60.00%	90.00%	Daily ACH; brokered through CRM channels

Where you sit on the ladder is mostly determined by revenue band

The single biggest variable in what you can borrow at is not your credit score. It is your trailing-12-month revenue and how many years of clean financials you have.

Brands under $1M annual revenue are usually stuck in MCA-land. Most lack the time in business or the audited statements an SBA loan or bank line requires, so the only credit available is Shopify Capital, PayPal Working Capital, Stripe Capital, and Wayflyer at the low end, all in the 25 to 50 percent effective APR band on typical 3 to 6 month payback.

Brands in the $1-5M revenue band start to qualify for community-bank relationships, sometimes an inventory-only ABL line, and a possible SBA 7(a) if FICO is above 700 and there is collateral. Shopify Capital and Wayflyer offers scale up here too, often to the $250K to $500K range.

Brands in the $5-20M band are where the bank lines open up. With 2 years of reviewed or audited financials and positive trailing-12-month EBITDA, you can usually get a committed bank line at Prime + 2 to 3 percent, so 8.75 to 9.75 percent. The Shopify Capital and Wayflyer offers are bigger too ($500K to $2M), but the bank-line option is now the right comparison.

Brands at $20M+ are negotiating covenant-light credit facilities at Prime + 1 to 2 percent (so 7.75 to 8.75 percent), with bigger committed lines ($3M to $25M). Most still take fintech offers for working-capital smoothing, but the structural cost gap to the bank line is now 2 to 5x.

Annual revenue band	Bank line	SBA 7(a)	ABL	Shopify Capital offer	Realistic lowest APR
Under $1M	No (insufficient time / financials)	No (need 2+ years, $500K revenue)	No	$2K to $50K	~25% (Shopify Capital best-case)
$1-5M	Community bank only	Possible (FICO 700+, collateral)	Inventory-only	$50K to $500K	~12% (SBA if qualified)
$5-20M	Yes (Prime + 2-3%)	Yes ($350K cap)	Yes ($500K-$3M facility)	$500K to $2M	~9-10% (bank line)
$20M+	Yes (Prime + 1-2%)	SBA cap reached	Yes ($3M-$25M facility)	$2M to $5M	~8.25% (Prime + 1.5%)

The practical takeaway: if you are sub-$1M and you take a 25 percent effective APR Shopify Capital advance, you are not failing at borrowing. You are using the only tool available to you. The mistake is taking that same advance at $5M revenue when a bank line is on the table at 9 percent.

Shopify Capital is the biggest growth story in ecommerce credit, and it is still not cheap

Shopify Capital deployed $4.2B to merchants in 2025, up from $3.0B in 2024 (40 percent growth). Q1 2026 accelerated to $1.4B in a single quarter, vs $821M in Q1 2025, a 70 percent YoY jump. Shopify's net Shopify Capital portfolio grew from $1.224B at the end of 2024 to $1.784B at the end of 2025 to $2.097B at the end of Q1 2026.

Revenue from Shopify Capital was $258M in 2025, with $84M in Q1 2026 alone vs $57M in Q1 2025 (a 47 percent YoY jump). The implied gross yield to Shopify on the portfolio is roughly 14 to 17 percent, which means the merchant's effective cost is higher (typical factor 1.10-1.17 paid back in roughly 6 months equates to 20-50 percent effective APR).

Why is this growing if it is the more expensive option? Because the underwriting is frictionless. Shopify already sees every transaction on the merchant's store. There is no application, no audited financial requirement, no collateral discussion. The offer arrives in the admin panel and the cash hits the bank account in a day or two. For a $1M revenue brand that cannot get a bank line at any rate, this is the working-capital tool that exists. For a $10M revenue brand that could probably get a 10 percent bank line in 60 days, taking a 30 percent effective APR Shopify Capital advance to fund inventory is leaving 20 points on the table.

Worth noting: Shopify Capital is structured as a purchase of future receivables (an MCA) rather than a loan, in most jurisdictions. That is why it does not get TILA APR disclosure, and why the merchant-facing pricing is always a factor rate, not an APR.

The refinance trade: when paying off MCA debt with a bank line is the highest-IRR move you will make

This is the move most operators we work with are leaving on the table.

Take a $200K Shopify Capital balance at roughly 26 percent effective APR (a 1.13 factor paid back in 6 months on daily remittance). That is roughly $52K per year in financing cost. Refinance into a bank line at 9 percent (Prime + 2.25), and the annual cost drops to roughly $18K. That is $34K saved per year, plus the cash-flow relief from monthly payments vs daily remittance.

The catch is the prepayment math. Most MCA products do not give you a prorated rebate if you pay off early. The fee is the fee, whether you paid in 4 months or 12. Clearco is one of the few that offers a prorated rebate on early payoff, and that materially changes the math. For Shopify Capital, Wayflyer, PayPal Working Capital and Stripe Capital, the early-payoff math is "you paid the fee already, refinancing only helps on the next dollar of borrowing."

The refinance trade is therefore most powerful at the point you are about to take a new MCA advance, not in the middle of an existing one. The framing we use with founders: any time a new advance is on the table, ask first whether you can get a bank line approved instead, and what the carry cost is for waiting 60 days. If the bank line is 9 percent and the MCA is 30 percent, the carry cost is almost always worth it.

A 5 percent fee on a Wayflyer or Shopify Capital advance paid back in 3 months is not a 5 percent borrowing cost. It is a 20 percent APR. The fee is the same; the speed is what kills you. The whole ladder from 9 percent to 90 percent collapses into one number once you do the conversion, and the operators who run that math choose differently than the ones who do not.

What this means for your business

Three plays to run this quarter.

Run the factor-rate-to-APR conversion on every offer in your inbox. Use the rule of thumb: fee divided by repayment months, times 12. If the answer is over 15 percent, ask whether a cheaper option is available before you sign. If it is over 30 percent, the answer is almost certainly yes for any brand above $3M revenue.

Build the bank relationship before you need it. The window where you can get a committed bank line is when you do not need the money. Most banks underwrite on trailing-12 EBITDA, audited or reviewed statements, and the personal credit of the guarantor. If you are $5M+ revenue with positive EBITDA and no banking relationship yet, your first call this quarter should be your business-banking manager, not Wayflyer.

If you are stuck on the MCA tier, consolidate and de-stack. Stacked MCAs are the single biggest preventable mistake we see in mid-six-figure to low-seven-figure DTC brands. Consolidating multiple advances into one cheaper facility (even another MCA, if a bank line is not yet on the table) usually drops your blended effective APR by 10 to 20 points and re-opens cash-flow headroom. The day you can refinance into a bank line is the day every operator we know wishes they had done it 12 months earlier.

For more on how cost of capital interacts with working-capital management at $5-20M ecommerce scale, see our interim CFO services overview and the related DTC funding drought index.

Sources and methodology

FRED time series. We pulled the Bank Prime Loan Rate (DPRIME, daily, end-of-month aggregation through May 2026) and Commercial Bank Interest Rate on Credit Card Plans, All Accounts (TERMCBCCALLNS, quarterly G.19 release through Feb 2026). DPRIME is the bank-line floor reference; TERMCBCCALLNS is the "what operators get charged when they swipe instead of borrow" reference. We also reviewed the Senior Loan Officer Opinion Survey (DRTSCIS, net percentage of domestic banks tightening standards for C&I loans to small firms) for context on whether the bank-line tier is opening or closing for ecommerce borrowers; net tightening unwound through 2025 but had not fully reversed as of the April 2026 release.

Note on the discontinued Fed E.2 survey. The Survey of Terms of Business Lending, which published weighted-average effective loan rates by loan size and bank class, was discontinued in 2017. The closest current equivalent is the Kansas City Fed Small Business Lending Survey, which reports average fixed rates running Prime + 1.5 to 3.5 percent on the most recent quarterly releases. We use that as a sanity check on the bank-line APR floor.

SEC EDGAR (Shopify Inc.). The Shopify Capital portfolio data is from the 10-K for FY2025 (accession 0001594805-26-000007, filed 2026-02-11) and the 10-Q for Q1 2026 (accession 0001594805-26-000019, filed 2026-05-05). Headline disclosures: $4.2B of merchant cash advances and loans purchased in 2025 (vs $3.0B in 2024); $1.4B advanced in Q1 2026 (vs $821M in Q1 2025); $1.784B net portfolio at Dec 31 2025 and $2.097B at Mar 31 2026; $258M in interest and fee revenue in 2025 and $84M in Q1 2026 alone. The 2024 quarterly capital-advanced split shown in chart 2 is partly estimated, trended from the FY2024 $3.0B total disclosure and the Q4 2024 stub; the writer-flagged caveat is in the chart notes.

Lender product disclosures. Wayflyer (5-10 percent fee, 1.02-1.10 factor, 3-9 month term) sourced from Finder.com 2026 review and the Luca Wayflyer pricing review. Clearco (6-12 percent fee, 1.06-1.12 factor, capped at 30 percent of weekly revenue) sourced from Clearco product page disclosures, May 2026. Shopify Capital merchant-facing pricing (factor 1.10-1.28 typically, daily remittance 10-30 percent of sales, milestones at 30 percent repayment in 6 months and 60 percent in 12 months) sourced from merchant disclosures in the Shopify admin panel. PayPal Working Capital (factor 1.01-1.58) and Stripe Capital (factor-rate, no published APR) sourced from product pages. Amazon Lending (8.99-36 percent APR, invite-only, partner-dependent) sourced from NerdWallet 2026 review.

Effective APR calculation. For daily-remittance products, we used APR = (fee / repayment months) x 12. This is the standard rule-of-thumb annualization for MCA-style products and matches the way most lender-comparison reviews convert factor rates. Term loans with declining principal use the effective interest method, which produces a lower APR for the same nominal rate. The ranges in chart 1 and the cost ladder table reflect typical merchant outcomes, not best-case or worst-case extremes. Actual APR for any specific advance depends on repayment velocity, which scales with sales volume.

Limitations. None of the major fintech MCA products publish a TILA-compliant APR because they are structured as future-receivables purchases. The 15-50 percent effective APR estimates are derived from disclosed fee plus typical repayment speed. The Shopify Capital 2024 quarterly breakdown is partly estimated. SBA 7(a) maximum-spread caps are accurate as of May 2026 but reset periodically; the figures here will need to be refreshed against SBA SOP 50 10 on the next quarterly cycle. Lender access by revenue band is editorial, based on our reads of typical underwriting thresholds; specific brands can land above or below the typical line based on collateral, FICO, and banking relationships.

Update cadence. This index is refreshed quarterly, tied to the Shopify earnings cycle (Feb, May, Aug, Nov) so the Shopify Capital portfolio table can be refreshed the day each 10-Q drops. FRED Prime and credit card APR refresh on the same cadence via the G.19 release. Next update target: August 2026.

Frequently asked questions

what is the effective apr on a 5% fee wayflyer or shopify capital advance?

It depends on how fast you pay it back. The rule of thumb for daily-remittance products is fee divided by repayment months, times 12. A 5 percent fee paid back in 6 months is roughly 10 percent APR. The same 5 percent paid back in 3 months is roughly 20 percent. A 10 percent fee on the same 3-month payback hits 40 percent. Run the math on your specific offer, do not trust the headline fee.

how do i convert a factor rate to an apr?

Subtract 1 from the factor rate to get the flat fee. A 1.10 factor is a 10 percent fee. Then divide that fee by the repayment period in months and multiply by 12. So 10 percent over 6 months is roughly 20 percent APR; 10 percent over 3 months is roughly 40 percent. For a term loan with declining principal, the effective APR is a bit lower because the average balance falls; for a daily-remittance product like Shopify Capital it is the right approximation.

is shopify capital cheaper than wayflyer or clearco for a $5m dtc brand?

Usually within a few hundred basis points of each other, and all three sit 20-50 percent effective APR. The bigger gap is the bank-line option, which at $5M revenue you can sometimes access through a community or business-banking relationship at Prime + 2-3 (roughly 9-10 percent). That is a 2-3x cost gap. The actual decision is speed vs price: fintech wins on speed and underwriting friction, bank wins on price.

why did the fed cut rates but my shopify capital offer did not get cheaper?

Fintech MCA products are not priced off the policy rate. They are priced off Shopify's read of merchant risk and how fast your sales velocity will repay the advance. Prime fell from 8.50 percent to 6.75 percent between September 2024 and December 2025, but the Shopify Capital factor rates we have seen on customer offers across that window have stayed in the 1.10-1.17 band. That is why bank lines opened up a margin gap on fintech borrowing this cycle.

can a $2m revenue dtc brand actually get a bank line of credit?

Sometimes, through a community bank or your existing business-banking relationship, but rarely at the headline Prime + 1-2 percent rate. Most $2M brands without 2 years of audited financials get pushed into either an SBA 7(a) loan (9-11.5 percent, slow), an inventory-only ABL line (10-15 percent), or Shopify Capital and Wayflyer (15-50 percent). The threshold where banks reliably underwrite ecommerce term lines is closer to $5M revenue with positive trailing 12-month EBITDA.

when does it make sense to refinance shopify capital into a bank line?

When two things are true: the dollar gap between the two rates clears your refinancing transaction cost (legal, lender fee, prepayment penalty if any), and the cash-flow relief from monthly bank-line payments vs daily remittance materially eases working capital. For a $200K balance at 26 percent effective APR, refinancing into a 9 percent bank line saves roughly $34K per year. If you are at $5M+ revenue and have a banking relationship, run the numbers; most operators we work with leave money on the table by carrying MCA balances they could have refinanced 12 months earlier.

what is the real difference between a merchant cash advance and a term loan?

A merchant cash advance is structured as a purchase of future receivables, repaid as a fixed percentage of daily sales. A term loan is borrowed principal that amortizes on a schedule. Two practical implications: MCAs do not get TILA APR disclosure (which is why the headline pricing is a factor rate, not an APR), and MCA repayment scales with revenue (which means slow months relieve cash pressure but fast months accelerate effective APR). Term loans are predictable; MCAs are responsive.

is it worth stacking multiple mcas while i wait for a bank line?

Almost never. Stacking compounds the daily-remittance drain, the combined effective APR routinely passes 80 percent, and a stacked MCA balance kills your strategic-buyer pool if you ever try to sell the business. The clean play is one MCA used as a bridge with a defined payoff plan, then a refinance into a bank line or SBA loan the day you can qualify. If you are already stacked, the highest-IRR move you can make is consolidating into one cheaper facility.