Buying a Shopify or direct-to-consumer (DTC) brand is different from buying an Amazon FBA business, and lenders evaluate them differently.
Many buyers approach Shopify acquisitions with the same questions they'd ask about an Amazon business. They focus on account health, suspension history, and product concentration.
Those are important considerations for an FBA acquisition, but they don't address some of the biggest risks associated with DTC businesses.
Unlike Amazon sellers, Shopify brands own their storefront, customer lists, checkout process, and customer data. That independence can be an advantage when it comes to financing.
However, DTC brands are also responsible for generating their own customer demand.
Amazon provides access to an existing customer base in exchange for marketplace fees. A Shopify brand typically needs to invest in advertising and other marketing channels to attract customers.
For lenders, the question is whether the brand has built a reliable customer base or depends too heavily on paid advertising to generate revenue.
Two businesses with identical EBITDA can have very different risk profiles depending on how they acquire and retain customers.
Why Owning Your Storefront Matters
One of the biggest advantages of a DTC business is having direct access to customers and their purchasing data.
A Shopify brand typically owns:
- Its domain and online storefront
- Customer email and SMS lists
- Transaction and purchasing data
- The checkout experience
- Brand assets and customer relationships
These assets give the business more control over how it reaches customers and generates repeat purchases.
For example, a brand with an established email and SMS list can generate sales from existing customers without paying to acquire those customers again through advertising.
The business can also analyze customer purchasing patterns, identify repeat buyers, and track how much revenue different customer groups generate over time.
Owning the brand and customer relationships can also create opportunities to expand into wholesale, retail, or additional marketplaces.
From a lender's perspective, these are meaningful advantages because they can make revenue less dependent on outside platforms.
Consider a brand generating 35% of its revenue from returning customers through owned marketing channels.
That portion of revenue is less directly exposed to rising advertising costs, which can make the business's cash flow more predictable.
Buyers should make sure lenders understand these strengths when presenting a DTC acquisition.
Paid Advertising Dependency Is a Major Risk
For Amazon FBA businesses, lenders pay close attention to marketplace concentration.
For DTC brands, advertising concentration can be just as important.
If 80% of new customers come from one advertising platform, the business is heavily dependent on a channel it doesn't control.
Changes to advertising costs, platform policies, or campaign performance could have a significant impact on profitability.
One of the most useful metrics to review is blended customer acquisition cost (CAC).
Blended CAC is calculated by dividing total marketing spend by the number of new customers acquired.
Lenders generally want to understand how that figure has changed over at least the past 24 months.
A business growing revenue while maintaining a stable CAC presents a stronger financial picture than one spending progressively more to acquire the same number of customers.
For example, if CAC has increased 20–30% year over year while revenue has remained flat, the business is spending more money to maintain its existing sales volume.
That trend can eventually reduce contribution margins, even if reported revenue still looks healthy.
Buyers should request monthly advertising spend and new customer counts, broken down by platform.
Calculate CAC independently rather than relying only on the figures provided by the seller.
Repeat Purchase Rates Tell You How Strong the Customer Base Really Is
Not all DTC revenue is equally valuable.
Some businesses have loyal customers who purchase repeatedly. Others rely on acquiring new customers for nearly every sale.
Customer cohort data helps distinguish between the two.
For a Shopify acquisition, request monthly customer acquisition cohorts covering the previous 24–36 months.
Review repeat purchase rates at:
- 90 days
- 180 days
- 365 days
These figures show how frequently customers return after their initial purchase and how much additional revenue they generate.
The type of product matters when interpreting the results.
For a consumable or replenishable product, a 90-day repeat purchase rate in the low single digits may indicate that the business depends heavily on paid advertising to generate each order.
For a durable product that customers purchase infrequently, a low repeat rate may be completely reasonable.
In that case, the focus shifts to whether the contribution margin from the first purchase is enough to cover the cost of acquiring the customer.
Both business models can qualify for financing.
What matters is having reliable data to explain how the business generates revenue and whether its customer acquisition strategy is sustainable.
If a seller cannot provide cohort data, the lender may have to make more conservative assumptions about customer retention and future earnings.
How Lenders Evaluate Inventory
Physical DTC brands often carry significant inventory, but buyers shouldn't assume that inventory will support the full value of the acquisition loan.
There are two important considerations.
First, acquisition loans are primarily underwritten based on the business's ability to generate enough cash flow to repay the debt.
Lenders generally evaluate debt service coverage, typically looking for a global debt service coverage ratio (DSCR) of at least 1.25x.
Collateral provides additional protection for the lender, but it doesn't replace the need for sufficient cash flow.
Second, lenders generally apply discounts when determining the collateral value of inventory.
Current, saleable inventory may be valued below cost, while older or discontinued products may receive little collateral value.
If the available collateral doesn't fully support the loan, SBA 7(a) program requirements may lead the lender to seek additional collateral.
In some cases, that can include liens on personal real estate with sufficient equity.
Before purchasing a DTC business, request an aged inventory report showing:
- Inventory on hand by SKU
- Unit costs
- Inventory age
- Sales activity over the previous 90 days
This helps identify which products are selling consistently and which may eventually need to be discounted or written off.
Any obsolete or slow-moving inventory should be addressed during purchase price negotiations rather than automatically accepted at its balance sheet value.
Supplier Concentration Can Create Significant Risk
Many DTC brands rely on a small number of manufacturers, and some depend on a single supplier for their best-selling product.
That creates operational risk if the supplier experiences production delays, quality issues, or other disruptions.
During due diligence, buyers should review:
- Supplier agreements
- Ownership of product molds and tooling
- Minimum order quantities
- Manufacturing and shipping lead times
- Alternative supplier options
Tooling ownership is especially important.
If the supplier controls the tooling needed to manufacture a product, moving production to another manufacturer may be more expensive and complicated than expected.
Buyers should also understand the true landed cost of each product.
That includes:
- Manufacturing costs
- Freight
- Duties and tariffs
- Payment processing fees
- Fulfillment expenses
- Returns
- Discounts
Build a per-unit cost model and compare the results with the company's financial statements.
Shipping and tariff assumptions from previous years may no longer reflect current costs, particularly in 2026.
Lenders will evaluate these expenses when determining whether the business's reported margins are sustainable.
How Seasonality Affects Financing
Seasonality is common in ecommerce, especially for brands that generate a large portion of their revenue during the holiday shopping season.
A business generating 40% of annual sales in the fourth quarter isn't necessarily a weaker acquisition because of that concentration.
Lenders generally evaluate trailing 12-month financial performance rather than assuming that strong holiday sales will continue throughout the year.
However, seasonality can create significant working capital requirements.
A brand may need to purchase large amounts of inventory months before its busiest selling period.
That means the business must fund inventory purchases well before receiving the related sales revenue.
For a new owner, the first major inventory order after closing can create an unexpected cash requirement if it wasn't included in the acquisition financing.
SBA acquisition loans can include working capital along with the purchase price.
Buyers should calculate these needs before signing an LOI rather than trying to arrange additional financing after closing.
Our deal affordability calculator can help estimate the financing needed for the acquisition and initial working capital.
Five Documents to Request During Due Diligence
When evaluating a Shopify or DTC acquisition, there are five reports worth reviewing closely.
1. Advertising Account Access
Request read-only access to the business's advertising accounts, including Meta, Google, and TikTok, covering the past 24–36 months.
Review:
- Advertising spend
- Return on ad spend (ROAS)
- Cost per thousand impressions (CPM)
- Historical campaign performance
- Account restrictions or disapprovals
Direct account access is preferable to relying on screenshots or summary reports provided by the seller.
It allows buyers to verify performance and review the account's history independently.
2. Customer Cohort Retention Data
Request customer cohorts organized by acquisition month.
Review repeat purchase rates and cumulative revenue at 90, 180, and 365 days.
This information can typically be exported from Shopify or the brand's customer analytics platform.
It helps determine whether revenue is supported by repeat customers or depends primarily on continued new customer acquisition.
3. Contribution Margin by SKU
Review profitability for each major product after accounting for:
- Cost of goods sold
- Inbound freight
- Duties
- Payment processing
- Fulfillment
- Returns
- Discounts
A product generating a large percentage of revenue isn't necessarily the product generating the most profit.
Understanding where contribution margin is concentrated is often more useful than looking at sales concentration alone.
4. Aged Inventory Report
Request a report showing inventory quantities, costs, and recent sales activity for each SKU.
This helps determine how much inventory is actively supporting the business and how much may eventually require a write-down.
It also provides a clearer picture of working capital requirements.
5. Shopify Revenue Reconciliation
Request a reconciliation between Shopify sales activity and actual bank deposits.
The report should account for gross sales less returns, discounts, and chargebacks, and reconcile those amounts to the funds deposited into the business's bank accounts.
Discrepancies may be related to the company's returns policy or accounting practices, but they should be fully explained before closing.
Our complete due diligence guide covers additional financial and operational information buyers should review.
Structuring a Deal When Revenue Growth Has Slowed
Many DTC brands come to market after experiencing a period of strong growth that has since leveled off.
The challenge is that sellers may still expect a valuation based on their strongest growth years.
Seller financing can help bridge the difference between the seller's asking price and the amount a buyer or lender is comfortable financing.
Under the SBA change-of-ownership guidelines described here, buyers must provide a minimum equity injection of 10% of total project costs.
A qualifying seller note on full standby can count toward up to 50% of that required injection.
For example, on a $2.4 million project:
- Total required equity injection: $240,000
- Buyer cash contribution: $120,000
- Qualifying full-standby seller note: $120,000
For the seller note to qualify, no principal or interest payments can be made during the SBA loan term.
These requirements are subject to updates under SOP 50 10 8.1, effective October 1, 2026, so buyers should confirm the applicable rules with their lender before finalizing the structure.
A seller note exceeding the portion eligible for equity injection credit can still be useful.
Additional seller financing remains subordinate to the bank loan, and its payments must be included in the debt service coverage calculation.
It also keeps the seller financially involved in the transaction after closing, which can be valuable when there are questions about future business performance.
Our deal structuring guide explains how these financing arrangements can be used during acquisition negotiations.
For transactions that exceed SBA 7(a)'s $5 million loan limit or require more flexibility, our FLEX program offers financing up to $10 million.
Our Capital Access program provides financing for acquisitions from $10 million to $250 million.
These programs have different terms and structures, but the underlying financial and operational due diligence remains important.
What Buyers Should Do Before Signing an LOI
Before submitting an offer on a Shopify or DTC brand, prioritize three pieces of information:
- Customer cohort data to understand repeat purchase behavior and retention.
- Advertising account access to evaluate customer acquisition costs and marketing performance.
- Aged inventory reports to assess working capital requirements and potential inventory losses.
Together, these provide a clearer picture of the business's customer base, profitability, and financial risks.
They can also help identify potential financing challenges before submitting the acquisition to a lender.
For more information about evaluating online businesses, read our complete ecommerce acquisition guide.
If you're evaluating a DTC acquisition and want to understand how much financing the business may support, get prequalified.
Our team can review the acquisition and help determine which financing program and structure may be the best fit.