- 1Shopify Capital originated $1.4B in loans and MCAs in Q2.
- 2CFO Jeff Hoffmeister says loss rates in payments and credit are at normalized levels.
- 3Since April, Canadian MCAs have been replaced by loans.
Shopify Capital originated $1.4 billion in small business loans and merchant cash advances in the second quarter. Shopify CFO Jeff Hoffmeister told the earnings call that Capital contributed more to the quarter than before, while loss rates in both payments and credit sit at normalized levels.
Canada switch
Starting in April, Shopify replaced its MCA product in Canada with a loan product, responding to new regulations from 2025. The company did not say which regulations in the Q2 earnings materials. One possibility is the amended national interest rate caps that took effect January 1, 2025.
The difference matters because a loan has an annualized percentage cost that can be determined and controlled when the contract is made, while an MCA has no predetermined, controllable annualized rate. Shopify said the main effect of moving Canadian MCAs to loans was how they are recorded in its financial statements.
Source reporting: deBanked.
