eCommerce business finance is similar yet different from traditional business finance. You can use regular business finance options as well. But the eCommerce industry offers you different and unique options. You can use eCommerce business finance products to empower yourself and your business. So, let’s go over how you can use these modern financial resources.
eCommerce Business Finance Options
Finance options for conducting business online will likely steer you to several alternative lending options. There are also plenty of platforms that offer unique services to eCommerce available.
Traditional Business Financing
Traditional business financing options are available to many eCommerce platforms. The only major hurdle to jump is meeting the requirements they set out. When it comes to banks, you can expect higher requirements and long wait times to get approved for a loan. If you’re a qualified borrower, you can go to your bank and have a chat with them. But being a qualified borrower entails having more revenues and good credit. If that describes you, you stand to benefit the most from bank loans. They will offer your better rates and repayment terms
Alternative lenders online also offer eCommerce business finance. You can apply for traditional business loans such as installment loans and lines of credit. Alternative lenders typically have fewer requirements and take less time to process applications. But they’ll usually charge far higher interest rates than other lenders. That’s especially true if you have bad credit or your revenues are too low.
eCommerce Business Finance Products Made Just For eCommerce
Some of the most useful eCommerce business finance products are tailored specifically for the industry.
eCommerce financing products can also be used to provide consumer credit to your customers. Consumer credit allows you to give your customers more buying power. It works by allowing your customer to buy a product immediately but pay for it over time in installments. That way your customers are more likely to purchase products they can’t afford to pay for in full right away. This can increase your sales and thus your revenue.
Consumer credit also does create some more risks you’ll need to consider first.
eCommerce Business Finance Platforms
Some platforms provide business loans, but specifically for eCommerce platforms.
Clearbanc is a smaller lender that only lends to a small list of business types. These business types all have a large online presence, and eCommerce is on the list. They lend to:
- Online retailers
- Subscription box companies
- Direct-to-consumer companies
- Mobile apps with in-app purchases
- B2B SAAS companies
- Mobile games with in-game purchases
Clearbanc provides fast merchant cash advances of up to $10,000,000 in 3 days or less. They don’t have any hidden fees and the rate you’re given at the start doesn’t change. Rates can vary widely from 1% to 20%. But they are known to be reasonable and will negotiate with borrowers to come to an agreement.
The eCommerce platform itself has launched a new eCommerce business finance service. They offer you eCommerce funding between $200 and $1,000,000. Their funding can come in the form of a short-term installment loan or a merchant cash advance. Both of these eCommerce business finance products carry factor rates of either 1.1 or 1.13. So, if you take a loan or advance of $10,000, you’ll have to pay back $11,000 or $11,300.
Shopify funding offers reasonable repayment terms. Once you’ve paid back 25% of the sum you borrowed, you have the option of paying them back in full.
When deciding which of their finance packages are best for you, keep in mind that they take automated repayments. The automated repayments are always the same fraction of the revenue you take in. So if you make less money, your repayments will also be smaller. Because of this repayment plan, there is no set deadline for paying them back. Once your loan is paid back in full, the automated repayments will stop.
Another great thing about Shopify Capital is that it’s easy to qualify for funding. Read our Shopify Funding Overview for more information on their requirements.
When Should I Use eCommerce Business Finance Products?
eCommerce business financing is useful for many purposes including:
- Working capital
- Subscriptions and memberships
- New equipment
eCommerce expenses often call for additional funding. But fortunately, eCommerce business finance is a fast industry. You can quickly get the financing you need and often at superior rates when compared to other business finance products.
As an eCommerce business, you can apply for a wider range of generic or specialized funding options. Using consumer credit can be beneficial to some eCommerce businesses as well. If you’re facing immediate expenses or just need extra working capital, eCommerce finance products are likely called for. Compare the best financing providers for your eCommerce business.
|Lender||Minimum Revenue||Time in Business||Minimum Credit||Next Steps|
|$50,000/yr||1 year||560+||See if you qualify|
|$100,000/yr||1 year||600+||Request Intro|
|$25,000/yr||3 mo.||500+||See if you qualify|
|$42,000/yr||9 mo.||550+||See if you qualify|
|$75,000/yr||2 years||620+||Request Intro|
|$10,000/mo||3 mo.||n/a||See if you qualify|
|$10,000/mo||1 year||n/a||See if you qualify|
|$15,000/mo||6 mo.||n/a||See if you qualify|
|Varies||Varies||Varies||See if you qualify|
|$100,000/yr||1 year||500+||See if you qualify|
|$100,000/yr||6 mo.||600+||See if you qualify|
|$10,000/mo||3 mo.||n/a+||See if you qualify|
|$100K/year||1 year||600+||See if you qualify|
|$10,000/mo||6 mo.||500+||See if you qualify|