It’s estimated that the global digital buyers market is roughly 2.14 billion, accounting for nearly eighteen percent of all retail sales worldwide. If you run e-commerce companies, online businesses, or online stores, you’ll need to keep your inventory stocked, marketing initiatives sharp, and your operation afloat with various costs. In the business world, you need money to make money—but what if you’re short on cash flow and working capital and need to find funding solutions? At AdvancePoint Capital, we can help answer that question.
Get Financing for Your eCommerce Business
eCommerce businesses need business financing products that can be flexible to the needs of there industry. Banks and credit unions are accustomed to more traditional business models and can't adapt to the needs of e-commerce businesses like AdvancePoint Capital can. We have a network of lenders and products that caters to e-commerce. Get pre-approved for e-commerce financing with AdvancePoint Capital and take advantage of our network of funding partners.
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AdvancePoint Capital makes the loan application process a simple, straightforward experience.
How Does E-Commerce Financing Work?
An eCommerce business financing comes in all shapes and sizes, reaching nearly every industry around the globe. If you live and breathe eCommerce, you’ll need every advantage possible to outlive and outgrow your competitors. That means there are a ton of factors that could influence why you need e-commerce loans for your online business. You need to know how e-commerce financing works and what financing is available.
e-Commerce Funding Options For Online Business
Short-Term eCommerce Business Loans
Short-term eCommerce business term loans provide working capital to businesses that need money quickly for business expenses and maintain positive cash flow. Credit score requirements are more lenient than traditional financing.
- Duration of time to repay from 3 to 18 months
- Same day application process
- Credit considered down to 600 FICO
Long-Term eCommerce Business Loans
Long Term Business Loans are term loans used by eCommerce Business Owners when they are looking for large expansion projects that require a larger loan amount and need to spread the cost over years to get affordable payments.
- Terms from 3 to 10 years
- Monthly payments
- Affordable rates
Small Business Administration (SBA) Loans for Online Businesses
SBA loans are small business loans that are fixed-term loans that offer low-interest rates and longer terms to repay versus other business financing products. An excellent credit score will be needed for approval along with good business financial health.
- SBA 7 (a) available up to $5,000,000
- Term loans and business line of credit available
- Comprehensive application process required
eCommerce Business Line of Credit
A line of credit is like a revolving business credit card. You can draw money at any time up to a credit limit and you only pay interest on the outstanding balance. Good credit history, good credit score, and the business's financial health are important for approval. Great interest rates.
- Revolving credit facility
- Draw down and paydown on demand
- Rates based on simple interest
Business Cash Advance for eCommerce
A business cash advance is an advance off of future sales of a business that is repaid by taking a percentage of future sales deposits.
- All credit considered
- Quick and simple application process
- Same day funding available
Merchant Cash Advance
Merchant cash advances are a great way to get funding for your business when traditional bank loans are not available. It has a flexible repayment which is based on a fixed percentage of future credit card sales.
- Flexible repayment schedule
- High approval rates
- Fast business funding- in as little as 1 day
How to Choose the Best E-Commerce Business Loans
When choosing the best business loan for your ECommerce business you need to consider your need and use of funds as well as your qualifications. It's important to evaluate the following factors when choosing the best business funding product.
- The need- The need is the "why" you are looking for money for the business and how are you going to put the capital to good use for the business. This may impact what may be the best business funding product.
- Product- Not all business products are the same and there are a lot to choose from including Short-term business loans, long-term business loans, business line of credit, SBA loans, equipment financing, merchant cash advance, and invoice factoring to name a few.
- Features- The features of a business funding product may certain needs better than others despite rate and costs. Sometimes a line of credit, which lets you draw funds when needed is a better solution than a term loan.
- Rates- The interest rate or factor rat is the calculation used to determine cost of funds. If the rate is to high it may defeat the purpose of financing.
- Fee's & Costs- Fee's and cost's and to the cost of financing and should always be compared to determine overall cost of a funding option.
- Terms- The length of time of the financing and how the product operates is important to understand and compare against other options.
- Conditions- Always consider any conditions a business funding option has such as prepayment penalties, personal guarantee, stacking fees, bounced payment fees and other stipulations in a business funding agreement.
Lets take the above information and consider the following business funding options in the market.
How Your eCommerce Business Can Benefit From Business Loans
There are many reasons ECommerce businesses seeking out capital for there businesses. The most common uses and needs for capital include the following;
Pro's & Cons of Business Financing for E-Commerce Businesses
Always carefully consider the benefits and dangers of financing your business before making any decisions and accepting terms.
- Financing allows businesses to expand and grow
- Funding solves problems that arise related to capital
- Avoids depleting capital reserves from the business
- Builds business credit
- Debts impacts balance sheet of business
- Increases monthly expenses with debt payments
- Can damage credit if delinquency or default
- Overleverage business which could lead to closure
How to Qualify for E-Commerce Financing
There are many factors that go into how to qualify for business financing. Your qualifications paly a significant role when matching your business with a specific business funding product your applying for. The following are the most important factors that lenders consider.
- Industry/Business Profile- The industry you are in plays a role in the lenders decision making because different industries perform differently than others based on the data.
- Time in Business- Experience and history with your current business is another important factor that can disqualify you from certain products. The longer in business the more options to chose from.
- Personal Credit & Business Credit- Personal credit plays a very important part in determining credit worthiness in the eyes of business lenders. Having good to excellent credit is so vital to approval and options. If you have bad credit, approval will be more challenging but still achievable.
- Cash Flow- Lenders will analyze your cash flow via your bank statements for revenue, cash flow management and business revenue consistency.
- Financials- Some business financing options warrant a deeper dive into your financials like tax returns, profit & loss, balance sheet, accounts payable, accounts receivable, invoices and other documents to secure approval.
Requirements and qualifications for approval vary from both lenders and products you are considering.
What’s Affecting Your eCommerce Business?
Your eCommerce business might be affected by various problems including:
This is a problem for most small businesses, not just those swimming in the eCommerce pool. To keep up with demand, purchase inventory, grow, and thrive, you’ll need enough cash reserves to get the job done.
Ignoring Marketing Costs
Your online business lives and dies through its marketing initiatives. Unfortunately, marketing spend is often swept under the rug when cash reserves run short. That’s where business funding can help open doors and ensure that your eCommerce business is reaching the right customers.
A Competitive Marketplace
While the online industry model has opened more doors than ever before, it’s also heightened the competition. To keep up with competitors, you’ll need access to a loan amount that works for your business and not against it.
Day-to-Day: Time is Money
Running eCommerce businesses is more than just putting up an online shop and pressing publish. It requires a tactful approach to balancing day-to-day operations, working capital, inventory management, equipment financing, market planning, and beyond.
How to Apply for a Loan for an E-Commerce Business
- Research- When you apply for business funding you should first research what products and terms are available in the market place and what lenders you would like to work with that offer the best products, rates and terms for your need. Interview lenders to determine your qualifications and options.
- Application- Once you have done your research and have chosen a business loan originator you will need to fill out a business funding application with both business and personal information. The product (s) you chose to apply for will dictate what documents will be required in addition to the application for pre-approval.
- Offer(s)- Once you have received the offer(s) in writing via a term sheet and/or disclosures you will want to review the rates, terms and features of your options. Shop and compare offers so you make sure you chose the best product and terms before accepting any offer.
- Acceptance- After you have selected your offer you will need to provide closing conditions and sign an agreement. Underwriting will need to clear the closing documentation before you are issued a full approval an clear to close.
- Business Funding- Upon final approval funds are usually sent same day to your business bank account.
Alternatives To E-Commerce Business Loans
Sometimes due to qualifications, offers or other reasons, business funding may not be the right option for you and your business, there are alternatives.
- Personal Credit Cards- It's easier to get personal credit sometimes than business funding.
- Ownership Funding- Sometimes the ownership will lend the business at attractive terms.
- Raising Capital- Investors, for equity, can offer capital to the business.
Advice, Tips, and Warnings about Financing an eCommerce Business
Your eCommerce financing journey should start with a few simple questions.
- Are traditional bank loans available for your business?
- What will I use the eCommerce business loans for? and how can it benefit my business?
- Which financing options put me in a position to succeed?
- What can I realistically repay?
- What possible hurdles or challenges may come with getting approved for eCommerce financing?
Take your time during the research phase and ensure that you’ve sufficiently answered all of the questions above. Take a cost vs. benefit analysis into consideration to decide which funding opportunity works best for your eCommerce company. Make sure you are working with the right financing company.
Our lender network at AdvancePoint Capital provides access to a variety of products and terms that suits most e-commerce business needs. We can save you time and money with our streamlined application process. We help you shop, compare, and save by working with AdvancePoint Capital today to find your loan and the perfect solution. We are not like traditional lenders!
Why Choose AdvancePoint Capital?
Experience – We’ve worked with eCommerce companies for years
Trust – We secure personal information and have extraordinary reviews and feedback from eCommerce companies. We always help you go over the fine print.
Loan Specialists – We’re professionals in the eCommerce financing marketplace
Affordable – No cost, no commitment loan quotes
Loan Financing Products – Alternative lenders network. We offer a wide range of eCommerce loan products and funding opportunities with numerous funding partners.
Note: Advancepoint does not provide commercial real estate loans and is not a financing company.
Apply for eCommerce Business Funding
Getting a financing solution or financial advice from AdvancePoint Capital is a fast and easy application process. All you need to do is fill out our simple online form, and application page, and in just a few hours — you’re well on your way to getting your eCommerce business loans. Don’t wait for your competition to get the advantage. Take control of your financing future with the help of AdvancePoint Capital.