eCommerce Business Loans

What are eCommerce loans?

An eCommerce business loan allows you to borrow additional funds to help you run and grow your small business or startup. These loans are tailored to the unique needs of eCommerce initiatives, providing access to capital crucial for inventory management, marketing, technological advancements, and overall business scalability.

How do eCommerce loans work?

Most eCommerce business loans offer a fixed amount of money that you pay back, along with interest, over several months or years. These loans often provide flexibility in how you use the funds, whether it's for inventory expansion, website development, marketing campaigns, or technology upgrades. Depending on your credit score, eCommerce business loans often have quicker application processes, allowing for faster access to funds. Interest rates on eCommerce business loans can vary based on the lender, loan amount, repayment terms, and the borrower's creditworthiness.

Best loan options for eCommerce businesses

OnDeck

✔ Funding: Borrow $5,000 - $250,000
✔ Minimum Credit Score: 600
✔ Loan term: up to 36 months
✔ Funding turnaround: as soon as same business day

OnDeck offers fast business loan options such as term loans, business lines of credit, and SBA PPP loans and funding as fast as 24 hours. Minimum requirements include: at least 1 year in business, 600 credit score, $100,000 in gross annual revenue and a business checking account.

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Credibility Capital

✔ Funding: Borrow up to $500,000
✔ Minimum Credit Score: 650
✔ Best For: Term loans
✔ Funding turnaround: Varies.

With Credibility Capital, borrowers with strong credit can obtain small business loans with attractive rates. A personal guarantee along with a business lien and revenue may be required to qualify. Note: This lender provides funding for all states except for North Dakota, Nevada, South Dakota, Vermont.

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Fundbox

✔ Funding: Borrow $2,500 - $150,000
✔ Minimum Credit Score: 600
✔ Loan term: 12-24 months
✔ Funding turnaround: as fast as next business day

Fundbox requires minimal documentation and access to a revolving line of credit without origination or maintenance fees. Borrowers are not required to have collateral (with exception of larger credit lines which are subject to a personal guarantee).

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Kabbage

✔ Funding: Borrow $1,500 - $150,000
✔ Minimum Credit Score: 640
✔ Loan term: 6, 12 or 18 months
✔ Funding turnaround: As soon as 1-3 business days

Kabbage offers borrowers a credit line up to $150,000 with monthly repayment options and no prepayment penalties. Approval as fast as same business day.

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Benefits of eCommerce loans

An eCommerce business comes with a lot of expenses, which might be difficult to cover without a business loan.

An eCommerce business loan can be used for:

• website costs
• to purchase a domain name
• hosting costs
• to pay staff, such as a manager and web developer
• insurance costs
• marketing campaigns

The two biggest issues for most ecommerce businesses is keeping enough inventory to meet demand and having enough capital to scale advertising campaigns when they find traction. These issues can happen simultaneously, which is another challenge that can be eased with an ecommerce business loan.

Types of eCommerce financing options

If you are looking for eCommerce business financing, there are a number of options for you to choose from:

Term Loans

Term loans are offered by banks and credit unions, as well as online lenders. You can choose from a short-, medium-, or long-term loan depending on your needs, how much you are looking to borrow, and what you are able to qualify for.

A term loan from a bank will be the most affordable type of eCommerce business loan due to the low interest rates and desirable repayment terms, however, you will find that the qualification requirements are harder to meet, as you’ll need a good to excellent credit score and strong business history.

You also have the option of a term loan from an online lender, which are generally easier to qualify for but come with high interest rates.

SBA Loan

If you are looking to grow an already established eCommerce business, an SBA loan may be just what you need. This type of eCommerce business loan is backed by the Small Business Administration so that there is much lower risk to lenders, and they are more likely to give approval for worthy applicants.

This guarantee makes SBA loans particularly competitive amongst small business owners and with strict requirements set both by the SBA and the intermediary lenders, an SBA loan can be difficult to qualify for.

With that said, if you think you are a good candidate for an SBA loan, do not hesitate to apply for this type of eCommerce Business loan as they are an affordable financing option, with low interest rates, high amounts, and desirable terms. (Just be aware that they can take up to 12 weeks to fund, so aren’t a good option if you need to move quickly.)

Business Line of Credit

If you are unsure how much or when exactly you will need funding, a business line of credit could be what you need. You are supplied with a credit line which you can draw from as and when you need to, only paying interest on what you actually use.

As long as you do not exceed the limit of the business line of credit, you can pay back what you have withdrawn and use it over and over again until the credit line is closed.

Inventory Financing

This type of business loan is secured against the inventory you use it to purchase, so it can be a good option if your credit history isn’t good enough to land the best business loans and you’re purely looking to finance more inventory.

Purchase Order Financing

If you sell to other businesses and find your business facing a period of unexpected growth and do not have the finances to fulfill orders, you can take advantage of purchase order financing.

This is where a lender advances you a large percentage of your outstanding purchase orders so that you can pay suppliers or manufacturers to satisfy your customer’s order.

You will be required to pay interest to the lender until you receive payment from your customer. This type of eCommerce business financing is worth it if it means you can keep customers coming back by getting their orders out to them as quickly as possible.

Business Credit Card

If you are looking to cover smaller weekly or monthly expenses, or are just starting up an eCommerce business, you may find a business credit card to be a good option for you.

Look for a business credit card with a 0% APR introductory offer. This means that for a specified period of time, usually between 12 and 18 months, you can use the credit card without accruing interest on what you’ve spent. If you then pay off your balance before the introductory period is over, you won’t have to pay any interest at all.

A business credit card will help you to build your business credit score, which is important if you are looking for further financing down the road, and is also a good option if you are unable to qualify for other options as a new business.

Merchant Cash Advance

All ecommerce businesses use a payment processor, and if you are successful, your payment processing company may be willing to lend you a loan called a merchant cash advance. This is where you borrow a lump sum but instead of paying it back monthly, your payment processor will take an agreed percentage from all future transactions until the loan is repaid in full.

This type of loan is a great choice if your personal credit history isn’t good but your business is booming, because the payment processing company are only concerned with your revenue. You can also often pay these off quickly, especially if you use the loan to grow your business further. Most charge you a fixed fee instead of interest, but if they do charge interest, make sure you’re well aware of what the loan may cost you.