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Best E-Commerce Business Loans

Managing an online stores can be costly, you need to make sure that you have enough stock and to ensure the smooth delivery of orders. If you want to start a e-commerce business, or expand your current e-commerce operations, you may require funding to realize your true business vision.

Financially Reviewed by Gordon Scott, CMT on 6.1.2021

At a glance If you run an e-commerce business, you may be worried that you can’t stock your inventory or that you won’t have the money to ship your products to your customers. You want to make sure that you have products available even when monetary funds are at a minimum. In this article, our experts cover the top small business loans tailored to the e-commerce industry. We also recommend specific lenders for each loan type.  

Recommended Reading: Best Pharmacy Business Loans

A Quick Overview of the Best E-Commerce Financing Options

You can use an e-commerce business loan to purchase inventory or cover staff expenses. The table below summarizes the loan types available to e-commerce businesses. 

Financing Need

Best Loan Type

Loan Features 

Recommended Lender

Fill out inventory orders,  update current technology

Merchant Cash Advance

  • Amount: Up to $500,000
  • Term: No set terms
  • Interest: One-time factor rate
  • Time to get the loan: Up to 24 hours

Fora Financial

Incremental expenses, fast cash

Business credit card

  • Amount: Limits depend on credit score
  • Term: Lender-specified
  • Interest: Lender-specified
  • Time to get the loan: 5-7 days

Fundera

Startup and running costs

Short-term loans

  • Amount: From several thousand to over $1 million
  • Term: From a few months to 20 years
  • Interest: 5% and 35%
  • Time to get the loan: 1-3 months

LendingClub

Cash for business growth

SBA loans

  • Amount: Up to $5 million
  • Term: Seven years for working capital, 10 years for equipment, and 25 years for commercial real estate
  • Interest: Fixed or variable rates
  • Time to get the loan: Up to 4-8 weeks

SmartBiz

Large purchases

Invoice factoring

  • Amount: Based on the invoice
  • Term: Depends on the client agreement, usually up to 3 months
  • Interest: 0.5% - 6%, APR: 28% - 60%
  • Time to get the loan: A few days up to a week

BlueVine

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.

1. Fora Financial - Best for Merchant Cash Advance

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.

2. Fundera - Best for Business Line of Credit

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.

3. LendingClub - Best for Short-term Loans

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.

4. SmartBiz - Best for SBA Loans

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.

5. BlueVIne - Best for Invoice Factoring

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.

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Questions to Address in your E-commerce Store Business Plan

Before you can launch an e-commerce business, you will need a solid business plan, which includes financial forecasting. Ask yourself questions like:

  • What are you going to sell?
  • Where are the goods going to come from?
  • How will you solve any shipping issues?
  • Will you charge for shipping?
  • Who are your competitors?
  • What's your unique selling point? Why should the customer choose you?
  • Where will you find your customer?
  • How will you reach your customers?

How Much Does it Cost to Open an E-Commerce Business?

Let's break down possible e-commerce business expenses.

  • E-Commerce website ($5,000 to $10,000): Sure, you can DIY your e-commerce website using the simple tools offered on the market, but if you intend to go big, you will need to set a good basis for possible expansion. Ensure the website has all the attributes you need now, and consider the features you will need in the future, including excellent CRM software.
  • The domain name ($2 - $20 per year): This is the most overlooked recurring payment.
  • Hosting (at least $100 per month): You might think that a shared hosting of, say, $20 is a good idea money-wise. However, you're working with customers’ details, and as such hosting security can be a considerable risk. Invest in a decent service and protect your customers.
  • Staff ($200,000): It's easy to get overwhelmed by all the different hats you will have to wear as an e-commerce business owner. Plus, fast growth is one of the defining properties of a successful online business. You need to plan for fast growth so that you won’t be caught off-guard if this does in fact happen.
    1. Web developer ($53,000): Professionally made websites need professional maintenance, so you'll have to keep a contractor on hand to fix bugs.
    2. E-commerce manager ($59,000): Once your business takes off, you'll have to hand over the day-to-day tasks to a manager so that you can focus on other aspects of your business. 
    3. Director of e-commerce ($100,000): Although hiring for this position is probably far down the line, it's good to include this expense in your plan.
  • Insurance and fees (local rates): You'll have to research this well, as each state and city may have different rules regarding e-commerce business operations and permits.
  • Payment processor (variable): You should make sure that the payment service you use to receive funds from your customers is secure, fast and straightforward. 
  • Marketing (variable): Each additional marketing channel means an added cost. However, marketing is essential to the success of any e-commerce business. You may wish to think about hiring a dedicated marketing team. Later, your business may benefit from a content production team (quality photos, videos, and blogs are crucial to online success).
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See Our Additional Guides on Industry-Specific Loans

Bottom Line

Taking out a loan adds to your responsibilities. If you want to set yourself up for success from the start, plan before signing any loan agreement. You will also need to start your loan search by deciding why you need the cash. You might want to stay on the safe side and keep your loan money for a specific purpose.

Once you decide the purpose of your loans, our recommended lenders will make it as easy as pie for you to get the money you require to establish or expand your e-commerce business.