7 Business Financing Options for eCommerce

In the coming years, eCommerce is expected to expand. To take advantage of the approaching boom, entrepreneurs should build a suitable entrance point as soon as possible. There are several financial options available to assist them in their attempt.

The hurdles of running a thriving eCommerce business are numerous. To keep the momentum rolling, you'll need fresh goods, technology, personnel, or suppliers. Investing in your company will help it grow, but you must also monitor your budget and cash flow. You must maintain that fine balance as an online business owner.

Let's look at some eCommerce financing choices to consider when determining the capital requirements for your new venture.

Personal Savings

Because of the risks of the firm failing, most aspiring entrepreneurs are hesitant to fund their venture with personal funds. However, there are certain advantages to using your retirement or savings accounts to fund your business.

"Bootstrapping" is the term used to describe this method. This helps to safeguard your credit score by removing the requirement to make monthly loan payments. Even if your resources are insufficient to completely support the firm, it reduces loan risk and frees up critical cash flow in the early months.

You might also borrow from a friend or family because there is no official approval process and no interest (or a modest amount) to repay.

Bank Loan

Consider a bank loan if you require more money than your friends or family can supply. They usually require collateral, but if you have a sufficient salary and a sound business strategy, you'll have a good chance of getting approved.

Most banks consider early-stage enterprises to be too hazardous to lend to for two reasons: one, new businesses are by definition riskier than established businesses, and two, horizontal lenders lack the technology needed to properly analyze risk in eCommerce.

Even if you have an excellent credit history and are approved for a loan, expect to pay interest rates in the high teens. Personal guarantees are necessary, so assess the danger with the profit when dealing with banks.

Business Credit Cards

Entrepreneurs must learn to prioritize their duties while using funds. This is when commercial credit cards come in handy. By deferring payment for another 30 days, these cards assist in conserving cash flow. Business credit cards, when used appropriately, maybe a wonderful source of credit for funding early operating needs.

The disadvantage of utilizing credit cards to finance your capital is that they will charge you hefty interest rates on your transactions. However, some credit cards offer no interest if the balance is paid off within 30 days. Another problem with credit cards is that if you do not make payments within a month, interest can accumulate.

SBA Business Loan

The Small Business Administration offers loan guarantees to help budding entrepreneurs get their firms off the ground. Because the government assumes the risk of default, you no longer need to offer a personal guarantee to the lender.

SBA loans provide large borrowing quantities, flexible payback options, and low-interest rates. To get a loan of up to $1 million, you just need to meet the SBA's definition of a small business. SBA loans come in a variety of forms, including the 7(a) loan, which is available to veterans who wish to invest in real estate, buy equipment, and recruit staff for their firm.

Revenue-Based Financing

Firms can raise capital through revenue-based financing by offering a proportion of future ongoing revenues for money invested. Until a specific multiple of the initial investment has been returned, a part of the income will be given to investors in a pre-determined proportion.

Although RBF had high comparable APRs in the past (to counterbalance the risk of unsecured financing), RBF providers have improved their ability to analyze the risk profile of the brands taking on that capital, allowing them to provide considerably better similar rates.

Revenue-based financing is often distinguished from debt and equity-based financing.]

Venture Capital and Angel Investors

In theory, venture capitalists and angel investors are comparable. They both supply potential enterprises with outside capital. There are, nevertheless, significant distinctions between the two.

Angel investors are typically rich individuals looking to diversify their portfolios by investing in a growing company. In exchange for investment, they want stock in the firm. Angel investors supply much-needed liquidity throughout the early phases of a firm, although their investments are often less than venture capitalists.

Venture capitalists, on the other hand, are business entities that combine their funds to invest in firms that meet their requirements. Because of their larger resources, venture capitalists can invest at any stage of your firm. They may also desire a seat on your Board of Directors in addition to equity.


For online enterprises, this kind of fundraising is quite common. To raise money through crowdfunding, you'll need a dedicated set of clients. eCommerce enterprises have raised a significant amount of money by providing supporters with benefits not available to non-contributors. Additionally, some crowdfunding sites allow users to contribute as little as $1,000 to your business through "equity crowdfunding."

Crowdfunding let people fund initiatives through the internet. In exchange for their investment, creators organize a campaign and give possible funders special advantages for the project. Crowdfunding has become a popular alternative form of financing for small enterprises.

Crowdfunding operates similarly to angel and venture capitalists. All you have to do is start a campaign on one of the main crowdfunding sites and give your parameters. If someone is interested, they can log in to the payment site by clicking the icon. Once the company is up and running, all you have to do now is keep your half of the contract.


eCommerce is expected to grow until 2025. Consumers and companies alike are seeing the benefits of online purchasing and delivery services as a result of the epidemic. The eCommerce trend will undoubtedly continue for a few more years until scientists certify that COVID-19 is under control, presenting an attractive opportunity for business owners like you.

Take advantage of this time to find out what types of finance are available to help you fund your startup. Each alternative has its own set of characteristics, disadvantages, and benefits. You must choose which option is best for your existing cash flow restrictions, business goals, and what your company can provide investors or financiers in return.

Whether you currently have an online business or want to start one, being your own boss is a gratifying experience. Start by validating your idea, growing your transactions, and then looking for financing. If money is the only thing holding you back, there are several solutions for every sort of business to flourish.

Drop us a message and see how we can help you!

“From side hustles to global brands, we're helping the most ambitious eCommerce businesses grow faster and achieve their goals.”
Abhishek Jha
Founder @Breakout

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