Best E-Commerce Business Loans Explained
This part focuses on the small business loan types outlined in the above table in greater detail. We also discuss what each recommended lender brings to the table.
To improve your online presence with your E-Commerce business you need a solid web page and platform, this can be done with a merchant cash advance. You can easily upgrade your inventory and get more stock to supply faster to more customers with this type of finance.
Fora Financial is recommended to use if you need an easy and fast loan to help with expanding your business without problems. You can have the money available within 72 hours after approval to use without restriction for your business.
You do not need any collateral to be approved for a merchant cash advance at this financial service and have no set term to pay back the loan. There are some benefits in the form of bonuses and discounts if you pay back the loan in a short period.
A business line of credit is an ideal option if your business credit score isn’t solid. A business credit card works much like a personal credit card, however, the limit on funds is usually larger.
What’s great is that if you refill your card before the start of each month, you won’t need to pay any interest. Plus, credit cards are generally easy to qualify for. If your business has just started out, and you as its owner don't have the credit score to qualify for other loans, a business credit card is a solid option. You can use the financing from your credit card to cover any of your expenses.
Fundera is a good option for acquiring startup capital. In addition to SBA loans and equipment financing arrangements, Fundera also offers low-interest business credit cards. One of the requirements you should meet is a gross monthly sales of at least $10,000.
Term loans provide you with a sum of money and you will be required to pay interest on the principal. They are predictable, can be acquired in just a few days, and can cover a wide range of expenses. Term loan amounts range from a few thousand through to millions of dollars. However, to qualify for a term loan you usually need collateral.
You should consider this loan type if your e-commerce business has established credibility and if you are in need of a relatively large amount of money. This type of loan is particularly suitable and useful if you wish to expand an existing e-commerce business.
LendingClub is known for helping small businesses and startups get started. Unlike most nontraditional lenders, this company provides longer-term loans of up to $500,000, lasting for up to five years.
Small Business Administration is a federal agency that backs up credible businesses via approved lending partners. There are several types of SBA loans. However, the SBA 7(a) loan is the most suitable for small businesses that have not had enough time in business to prove themselves.
Nevertheless SBA 7(a) loans are hard to qualify for. If you do manage to meet the lending criteria an SBA 7(a) loan will provide you with the cash you need with flexible longer terms and lower interest rates.
If you have long-term plans for your e-commerce business and require quite substantial funding, this loan type is for you. While the approval process can take time, it is often worth the time and effort.
SmartBiz is a certified SBA lender. It offers competitive rates and fast approval. For an SBA loan, you need a credit score of 650 and a business score of at least 150. While this lender doesn't require any fixed income figures, you need to prove that you have sufficient turnover.
If you are selling to other businesses (i.e. B2B) your e-commerce shop will most likely not see payment for a few months. You may also need to make sizable purchases, which could leave you without operating cash. A short-term invoice factoring loan is an excellent way to go for businesses that find themselves in this situation.
With an invoice factoring loan, you sell your outstanding invoices to the lender. Once your invoices are paid the lender will send the discounted amount back to you.
If your business suffers from a cash flow gap, invoice factoring can cover this gap for a short period. In other words, an invoice factoring loan can tie you over while you wait for your clients to pay, as per your agreement.
BlueVine offers short-term loans with fast approval periods, which is ideal for invoice factoring. BlueVine provides loans to borrowers with a credit score of 600 and higher that have been in the business for at least six months. Ensure you have enough turnover to qualify for this lender (at least $10,000 monthly) before applying.