eCommerce Loans and Funding up to $675,000
Applying for an eCommerce loan doesn’t have to be complicated. We’ve approved tons of eCommerce businesses, just like yours, for up to $675,000 within 1 business day. Check if your business is eligible with no obligations, no fees, and no impact on your credit score.
Online eCommerce platforms like Shopify and Amazon have made it easier for entrepreneurs to start businesses. Regardless of industry, companies across the board require funding to strengthen and grow their business. Ecommerce companies find themselves in a unique situation. Fewer tangible assets and a lack of business history make it harder to meet conventional loan approval guidelines.
According to Investopedia, the failure rate of start-up companies in 2019 was close to 90%. Additional research shows 21.5% fail in year one, 30% in year two, and 50% by year five. Lack of financial resources was the most commonly cited reason for failure. Obtaining eCommerce financing in the essential phases of development can help keep a business afloat until sales further increase.
Even though some lending institutions haven’t yet caught up to meet the needs of online business owners, there are e-commerce financing options available.
What Are eCommerce Loans?
E-commerce business loans can help online business owners and merchants obtain the additional working capital necessary to sustain or grow their business. Continue reading to learn more about the types of loans and funding options that may be available for your eCommerce company.
Types of eCommerce Business Funding Solutions
For eCommerce companies looking for funding that can sustain or grow their operations, there are a variety of funding solutions available. A merchant cash advance enables eCommerce companies to borrow funds against their future earnings. Merchant cash advances are repaid using a percentage of the business’s sales.
Small business loans are types of installment loans that are traditionally offered to eCommerce companies as a lump sum payment with fixed monthly repayments and are generally repaid over a period of 1 to 5 years. The SBA offers a number of alternative loan products as well, such as 7(a) loans, which do not have as many restrictions and can be repaid over a much longer period, up to ten years.
The SBA also offers microloans for e-commerce companies, with funding amounts available up to $50,000. These can be used as working capital, inventory purchases, and a variety of other uses – other than debt consolidation or to purchase real estate.
Business lines of credit can provide access to a revolving line of credit for eCommerce businesses looking for flexible financing, much like a credit card. As the balance is paid back, the credit line will become available again. You will pay interest only on what you borrow.
Consider equipment financing if you need new equipment for your eCommerce business. As a result, you are able to invest in new equipment, which may result in increased revenue or the opportunity to offer new products. In most cases, the equipment is used as collateral for the loan, with repayment periods lasting a few years.
Last but not least, eCommerce companies can utilize invoice financing if they are short on cash due to unpaid invoices. The agreement allows up to 80% of the invoice value to be received by the company in exchange for a small fee.
How Do eCommerce Loans Work?
Ecommerce loans are just like installment loans for any other industry. After an applicant gets approved, the lender dispenses a one-time lump sum payment (except for lines of credit and credit cards) of the requested money. Upon receiving the money, the borrower has a legal obligation to repay the lender the total amount of the loan plus interest over a certain period of time.
Ways to Use eCommerce Business Loans
Ecommerce loans can generally be used to fund any business-related expense unless lender restrictions apply. Common uses for loans include start-up financing, stabilizing cash flow until the business can turn a profit, hiring contractors, advertising costs, and inventory management.
How to Qualify For An eCommerce Loan (With the Best Rates)
Traditional lenders consider several factors when determining what rate to charge a potential borrower. These factors include credit history, business health, industry risk, assets for collateral, loan type, and loan term. While some aspects are out of your control, a solid application in other areas (like credit history) is highly beneficial.
Where to Get eCommerce Business Loans
Loans for an eCommerce business can be funded through conventional banks or specialized online lenders. After determining which type of financing you will need and what you may qualify for, you can begin to compare lenders.
Online lenders may offer more flexibility. If you don’t have assets for collateral or years of established business history and need money fast, consider applying online. As a bonus, funds can usually be in your account within a day or two.
How to Apply for the Best eCommerce Funding
To be approved by MCashAdvance, you must meet the following requirements:
- U.S. citizen or legal resident
- 18 years of age or older
- Your e-commerce business must be at least six months old
- You must have a credit score of 500 or higher
Funding amounts vary based on your business’s financial health, but you may be eligible to receive up to $500K.
Your repayment period depends on how much funding you receive and how much business you conduct.
What Are the Benefits of Getting eCommerce Funding?
Funding Options to Fit Your eCommerce Needs
Various funding options are available depending on an eCommerce company’s unique needs. From microloans for bulk supply purchases to lines of credit for recurring expenses, you can be sure to find online business financing that fits your needs.
Access to Increased Working Capital
Overcoming cash flow challenges before turning a profit, hiring a website developer, and running large-scale advertising campaigns all have one thing in common – they cost money. And money is something not every entrepreneur can easily access in those first few years of business. Sourcing alternative financing methods can help scale your business to the next level by investing in technology, equipment, or services with a high return on investment.
Interest Rates Are Dependent on Credit History
Credit score and credit history are significant factors regarding how affordable a loan will be for your eCommerce business. Lower credit scores result in higher interest rates. Higher rates increase the total cost of the loan, possibly defeating the purpose of obtaining financing in the first place.
Long List of Prerequisites to Qualify
Obtaining small business loans from conventional lenders requires meeting rigorous application requirements to get approved. Without a good credit history, proven time in business, and the ability to generate revenue, securing funding may be difficult.
Lenders Prefer Established Businesses With Solid Financial Histories
If your e-commerce company is relatively new, it might be hard to get your ideas off the ground without any tangible proof that your business will eventually become profitable. Conventional lenders want to see financial statements and associated revenue projections.
Putting up Collateral
To reduce risk and ensure debts will be made whole, many lenders require some form of collateral to secure business funding. For those in the earlier phases of their eCommerce journey, this often means personal assets such as your house and car. However, putting up personal items as collateral comes with many risks. Your home may be taken from you if your business fails and you cannot pay your monthly payments.
Tips for Funding an eCommerce Business
When determining the correct type of funding for your eCommerce business, it’s essential to consider the best option for your situation before speaking with a loan advisor. Gather your credit history, list of assets for collateral, financial statements, and relevant documents to help gauge what you may qualify for.
Frequently Asked Questions About eCommerce Loans
Fortunately, alternative methods exist to obtain eCommerce funding for new and established businesses. Some options to consider are pitching VCs and investors, bootstrapping, crowdfunding, eCommerce grants, and revenue-share financing.
Depending on the funding source, some loans can be dispensed as soon as the next business day. Talk with your lender to review their approval timeline for the release of funds.
Yes, Amazon currently offers an invitation-only program called Amazon Lending to eligible sellers with loans up to $750,000 and business lines of credit. There are also alternative Amazon lenders available that don’t require an invitation.
Due to the high dollar value of loan amounts, collateral is often required to secure e-commerce business loans. Assets that may serve as collateral include equipment, inventory, real estate, and vehicles.
Funding Your Business Is Our Business
eCommerce Loans Can Help Grow Your Business
Many lending options help eCommerce businesses protect or scale their businesses to new levels. Contact mCashAdvance to apply or speak with an advisor and to learn more about how we can help your online business flourish.
Find The Best Payment Processing For eCommerce
Online credit card processing fees can seriously reduce an ECommerce business’s profit margins. In the event that an eCommerce business chooses to pass credit card charges on to customers to reduce costs, it may upset customers and reduce repeat sales. Scaling an eCommerce business is difficult without repeat customers. mCashAdvance provides online credit card processing for small business that allows you to process all of your clients credit and debit cards with zero transaction fees. This is both good for business and for customers. Instead of transaction fees, you pay a small fixed monthly fee to handle all of your credit card processing.
Don’t Allow a Lack of Funding
to Hold your Business Back
It’s Time To Move Your Business Forward!