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February 27, 2024

Ecommerce Funding: What Are Your Ecommerce Financing Options?

What are your ecommerce funding options? We unpack all your ecommerce financing options, from loans to crowdfunding in our ecommerce funding guide

Ecommerce Funding: What Are Your Ecommerce Financing Options?

Funding for eCommerce businesses often face financial obstacles that can be difficult to overcome. Without the right capital, there isn't much room for growth and expansion in your online store. So if you're ready to take your business to the next level, but don't have access to all the funds necessary, where do you turn?

The truth is there are a variety of eCommerce funding options available today. Whether it's equity financing or debt financing, grants, crowdfunding, or a business loan for eCommerce, it doesn't hurt to look into these resources as they could help get your business up and running faster than expected. Here we'll explore some of these potential sources of funding for eCommerce businesses so you can make an informed decision when selecting your eCommerce financing.

Debt or equity funding

It’s important to know if debt or equity funding are good options for your business. If you go down the debt route, you’ll need to be able to pay back the loan at a predetermined rate of interest over an agreed-upon period of time.

With equity funding, the investor provides capital in exchange for a share in the business. You should also factor in how much control and influence this equity partner will have if you choose to go with an equity investor. You may find it best to utilize a combination of both debt and equity financing.

Traditional bank loans

Bank loans offer businesses security of a fixed repayment amount over a set period. Given that banks rely on traditional methods of proof to evaluate a borrower’s trustworthiness, the process of acquiring a loan for an eCommerce business may be easier for those with good credit histories and extensive collateral but can be difficult for businesses that lack these measures.

Traditional bank loans often come with high-interest rates compared to other alternative eCommerce business loan options and require payments whether or not the business experiences financial success.

Exploring private equity, venture capital, online lenders, and SBA financing

Exploring alternative lender options can be intimidating but with a bit of research, it can also be a rewarding venture. Private Equity, Venture Capital, Online Lenders, and the Small Business Administration (SBA) all offer different types of financial support that enable businesses to get the funding they need while protecting their long-term goals. Private Equity provides debt or equity financing in exchange for a portion of ownership. Venture capital is an investment in a high-growth potential startup.

Online lenders make it incredibly easy to access funds quickly and save time when time is of the essence. SBA financing is heavily regulated but offers competitive rates and longer terms than most lenders – perfect for medium to large businesses looking for expansion. Understanding each option will help the business owner secure the best eCommerce business loans available for their circumstances.

Crowdfunding platforms

Crowdfunding platforms offer an innovative eCommerce finance option. By leveraging the power of social media, entrepreneurs can target audiences that have a shared interest in their product or service and build a large network of enthusiastic supporters who are willing to donate money towards their projects.

With the added incentive of being able to provide investors with early access or customized products, many entrepreneurs have found success in crowdfunding by tailoring the campaign specifically to their needs and making sure that they stay engaged with followers throughout. This strategy has become especially popular with start-ups that don't have traditional sources of capital available at their disposal.

Business grants and government programs

Government programs can be a great asset for small business owners looking to get financial assistance. Business grants provide much-needed funds for those starting a new business or working to expand an existing one. These grants can cover a wide range of needs, from marketing costs to research and development and more.

Depending on the program, businesses may be able to get thousands of dollars in grant money. This makes them very attractive options if you're looking for a source of capital that won't add to your debt load. Although grant applications take time and effort, the opportunity for substantial funding without having to pay it back could completely transform your business.

Once you've secured your funding, you'll want to keep track of where that money is going. To make bookkeeping easy for your eCommcerce business, utilize a bookkeeping service like EcomBalance. EcomBalance offers monthly bookkeeping services for growing eCommerce brands, agencies, and software companies.

Boopos offers long-term loans to borrowers and packback flexibility from 1-5 years with no prepayment penalty and quick approvals. Want to learn more about eCommerce funding with Boopos? Contact us today.

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