7 Business Financing Options for Ecommerce

top 7 business loans for ecommerce businesses

Having an ecommerce business in 2021 is super important. Lots of companies noticed the importance of accepting online payments and having an online store during the start of the Coronavirus-19 pandemic. Luckily, the majority of those that already had an existing ecommerce business did not suffer such heavy financial loss as those that only operate in person. However, whether your business suffered from the pandemic or not, there are always reasons to invest in your company as well as unexpected costs that come up that luckily a loan or advance can help with.

Due to the nature of ecommerce businesses, a business may even qualify for merchant cash advances since as a business the operates solely online typically accepts credit card or debit cards. This means that for online businesses, there are various ways to receive working capital than just your traditional small business loan. In addition, this opens doors to work with traditional as well as non-traditional funders. Below you can explore the top 7 business financing for ecommerce businesses.

Term Loan

A term loan is a kind of financing where your ecommerce business gets a specific amount with a specified repayment schedule based on a fixed or floating rate. These loans are available from both traditional lenders and online financing companies.

It can be a short-term (1 year), intermediate or long-term loan that can go up to 25 years. For instance, you can apply for $250,000 for a warehouse purchase for your business to be repaid within 15 years at a 14% fixed rate. You’ll repay fixed monthly amounts until the end of the loan term.

Line of Credit

A business line of credit is a pre-approved amount (from $50,000 to $500,000) of financing, which your ecommerce business can draw on any time you need cash. It’s ideal for working capital, emergencies and ongoing expenses, and you only pay a fee for the amount you draw on the line of credit.

With a line of credit, you never have to worry about cash flow issues. For instance, you can qualify for $300,000 but only draw $40,000 for some use. The fee only applies for the $40,000, and once you repay, you have the entire amount available to draw on.

Invoice Factoring

This is financing against your purchase orders/invoices. The cash you get unlocks your cash flow problem, and you can deliver customer orders within the guaranteed time. For invoices, once they’re paid, the funder deducts their money.

For instance, assume you have a large order and no cash to buy the stock. A financing company pays the manufacturer/supplier directly for the delivery of inventory to you. The customers pay the financing company directly, and the financier deducts some fee and sends the remainder to your ecommerce business.

Asset-Based Loan

This is a loan secured by an asset such as property, plant and equipment (PP&E), inventory, accounts receivable or marketable securities. A lender uses a loan-to-value ratio to determine how much to give your ecommerce business.

For instance, if you have accounts receivable valued at $120,000 and the lender gives a loan-to-rate value ratio of 70%, your maximum loan amount is $84,000.

For asset-based financing, lenders prefer more liquid assets that are easier to sell. These loans are easier and faster to apply for and have better interest rates.

Merchant Cash Advance

Merchant cash advance is a great financing option for ecommerce businesses with good credit card sales. Your ecommerce business can access cash against future sales, and you only have to provide the financial evidence.

The financing company will review your credit card processing statements during the application process. If approved and once the advance is provided, the funder will receive its payments as an agreed upon percentage of your future credit card sales.

SBA Loan

SBA loan is most suitable for more established online businesses and comes from the U.S. Small Business Administration (SBA guarantees the funding). SBA uses specific banks as intermediaries for small businesses that meet stringent conditions. The SBA loans you should consider include the SBA 7(a) loan, the SBA 504 loan program, the SBA micro-loan program, and others.

Business Credit Card

A business credit card is one of the most effective funding sources for an ecommerce business, and it’s one of the best ecommerce loans for startups struggling with cash flow issues. The business credit card gives you access to ready cash up to the predetermined amount. Lots of business credit cards come with great perks, such as cash back. This card also helps separate your personal and business finances.


Due to the nature of an online business, there are more than just a traditional business loan as a business financing option. Whether your online business needs more merchandise, more staff, marketing costs or expansion there are loans, advances, and lines of credit available to get your ecommerce business closer to the working capital it needs to succeed.

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