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Starting and operating an ecommerce business requires capital, which you may not have on hand. Even with really compelling business idea and proven sales, ecommerce ventures have a hard time obtaining funding. And unfortunately, funding can make or break a business.
Funding is one of the most difficult hurdles that ecommerce businesses face, regardless of the economic condition. So, if you don't have the finances to get your ecommerce business off the ground, here are five companies providing funding opportunities.
7 Best Ecommerce Business Loans and Funding
1. Clearco
Ecommerce startups can get funds up to $10 million from Clearco without giving up any equity. They provide a variety of funding choices that include inventory funding, line of credit, and marketing funding. Clearco provides equity-free funding on the basis of the merchant’s performance and revenue.
The merchant must have sales and use platforms like Amazon, Shopify, Stripe, and Square. They fund ecommerce companies who have 6+ months of revenue greater than 10k/month from connected sales platform(s). The investment ranges from $10K to $10M and is reimbursed through a revenue share agreement plus a 6-12 percent flat fee.
2. 8fig
8fig is an ecommerce funding provider for DTC and Amazon brands. It has a special focus on funding your entire supply chain by providing brands like you with a free planning tool that makes it simple to calculate exactly how much capital you need, and then continuously access capital as your brand continues to grow.
8fig takes no equity and charges a fixed rate between 6-10% of capital. No personal guarantees required.
Sign up for 8fig here or read our full 8fig review.
3. Payability
Payability offers frictionless funding options to ecommerce businesses that sell on various online platforms, including Amazon, Shopify, Walmart, eBay, and others. Payability's customers receive the funds they need to reinvest in inventory, promotion, hiring, as well as launching new products.
They do not run credit when processing your application. Instead, they base their decisions on your company's overall health and sales performance. They provide up to $250,000 in cash advances and accelerated daily payments dependent on your sales.
Payability provides multi-channel flexibility. Since Payability's funding is based on sales, you won't have to take on debt to invest in your company. Instead, for a small, predetermined rate (typically between 1-2%), you can get access to capital.
Payability’s Instant Advance funds up to $250,000 in exchange for a fee of 0.5-1% per week. As you sell, you’ll simply remit a fixed percentage of your sales to Payability, typically ranging between 12-25%.
Additionally, instead of waiting for marketplace payouts from Amazon, you can get your payout the next day with Instant Access in exchange for a fee of 2% fee on gross sales.
Sign up for Payability here.
4. Wayflyer
Wayflyer provides flexible, non-dilutive loans and funding specifically for ecommerce businesses. The funds can be used for inventory, marketing, or to invest in other areas of your ecommerce business.
Wayflyer does not charge interest rates. Instead, they charge one simple fee that you can pay back as a percentage of your sales so you can derisk your business as much as possible.
To eligible to receive a loan from Wayflyer, you must:
- Be an ecommerce business
- Have 6 months of selling history
- Have at least $20,000/mo in average sales
- Be incorporated in a country they support
Wayflyer offers more than just ecommerce loans. When you receive funding from Wayflyer, you also gain access to their analytics platform that provides marketing insights so you can understand what’s working and what’s not, and then make more intelligent marketing investments.
Further, Wayflyer offers free access to their consultants that will help you analyze your data and optimize your marketing efforts.
5. Shopify Capital
Shopify Capital’s funding program is not like a standard small-business loan, in which you repay the loan in monthly installments plus interest. Instead, you pay them back a percentage of your daily sales. Think of it as an income-based repayment program that scales with you so you’re not overwhelmed if you have a bad month.
They offer the following three funding options:
- Inventory Funding
- Marketing Funding
- Payroll Funding
Eligible merchants automatically receive offers on their Shopify Capital’s admin page dashboards without having to apply. However, merchants must fulfill eligibility criteria in order to get funding from Shopify Capital:
- Must use Shopify
- Ecommerce business operation in the U.S., the U.K, or Canada.
- Low-risk business profile
- Using Shopify Payments or a third-party payment provider
- Your ecommerce business processes a minimum amount of sales
Sign up for Shopify Capital here.
6. PayPal Working Capital
PayPal Working Capital is a merchant cash advance that is linked to your PayPal account. They assess your eligibility by analyzing your sales history and PayPal account performance. Consequently, there is no effect on your credit score. You must have steady sales volume.
Additionally, they require that you process $20k in annual sales if you have a premium PayPal account or $15,000 in annual sales if you have a Business PayPal account. They determine the fund amounts you get through PayPal Working Capital using the total amount of sales you make through your PayPal merchant account each year. They'll only give you funds up to 30% of your annual PayPal sales.
There will be only one modest fixed cost to pay, with no interest or hidden fees. Payments are made automatically and are based on a percentage of your PayPal sales. Consequently, you'll pay more when sales are strong and less when sales are slow.
However, on days when there are no sales and you do not have to pay anything, you must repay a minimum of 5% or 10% every 90 days to keep your loan in good shape. Acquaint yourself with their eligibility requirements, as they reserve the right to change them at any moment, without notice.
7. Payoneer
Payoneer offers 90-day payment terms, extendable even further for firms that sell their products online through Amazon, Walmart, or Tophatter. The Capital Advance tool from Payoneer does not demand collateral and determines the funding amounts on the basis of your previous sales records.
Ecommerce merchants can use the company's funding and daily advance options. Merchants can put these funds toward expanding into new geographic markets or product categories, as well as marketing and inventory growth to adapt to seasonal changes.
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