It’s a proud but scary moment as a seller when your store is scaling fast and needs external ecommerce funding in order to hit its next growth level. 

In today’s ultra-competitive ecommerce market, building a successful brand is a huge achievement — especially when you consider the fact that 90% of online stores fail within the first 120 days. With cash flow being the main cause of failure for some 80% of businesses, ecommerce funding is often the most logical next step for a growing store.

Yet despite the clear need for an influx of capital, many ecommerce entrepreneurs still hesitate to secure funding. This is largely due to the many misconceptions about a seller’s options for external capital to grow their ecommerce business. 

In this article, we’ll clear the air surrounding the types of ecommerce funding available today. We’ll also share some insider tips on how you can use the right kind of ecommerce funding to scale your business without taking unnecessary risks.

If you’re ready to take the next step in your ecommerce journey, look no further. Learn how SellersFunding can help you grow.

The top 4 myths about ecommerce funding

If you’ve ever thought about securing outside capital for your store but felt like a deer in the headlights due to all the contradictory and misleading information, you’re not alone.

It can be challenging to sift through the noise when you’ve got other important tasks to take care of. 

We’re here to help. Let’s dive into some common myths, misconceptions and outright lies surrounding the world of ecommerce funding.

Not sure why it’s so hard to get an ecommerce loan from a bank? Check out our article on 3 Reasons Traditional Banks Just Don’t Get Ecommerce Sellers.

MYTH #1: New businesses aren’t eligible for ecommerce funding

We all have insecurities, even in business. For store owners, insecurity often tends to show up as the belief that your business’s young age will prevent you from getting external capital. 

But the truth is, that largely depends on the type of funding partner you choose. 

Traditional funding from banks and financial institutions is notoriously difficult for growing sellers to get access to, even for the more “established” ecommerce businesses in traditional niches. 

But while traditional funding partners may turn their back on successful young stores, there’s a silver lining to that rejection. Many modern ecommerce funding providers don’t care about the number of years you’ve been in business. If you’ve got the sales to back it up, they’re ready to support you with open arms. 

At SellersFunding, we accept brands with just 12 months of selling history when assessing eligibility for our Daily Advance solution, with zero collateral requirements.

MYTH #2: It’s hard to secure (enough) ecommerce funding

To be honest, this one is kind of true. 

As an online retailer, it can be challenging to secure the right amount of funding. But as with the previous myth, this statement is only half true.

Most of the time, sellers have a difficult time securing the correct amount of capital only when working with traditional lenders like SBA loans, bank loans, and bank-backed credit lines. 

As we’ve seen, traditional funding institutions are yet to catch up to the ecommerce industry’s lightning-fast growth. Their strict requirements and long application processes create a huge hurdle for growing brands. 

But let’s say you make it through the red tap. Even then, the amount you’re approved for may not be enough if you’re a brand that’s scaling fast. For example, the average SBA loan is just $704,581.

Fortunately, traditional funding partners aren’t your only option. Today, there are a variety of modern ecommerce funding providers ready to help growing businesses access the right amount of capital.

For example at SellersFunding, our ecommerce funding experts can help you secure up to $5 million in 48 hours or less (more on this in a minute😉).

MYTH #3: “I have to agree to expensive fees and rates“

Unfortunately, many ecommerce loans have high fees, hidden charges, and unfavorable terms (looking at you, credit cards and Amazon Lending). 

Given the prevailing perception of having a limited number of funding partners and options to choose from, it’s no wonder so many sellers and brand owners feel their store can’t do better than the expensive fees and rigid terms so often thrown their way.

So, they settle — giving up precious budget and margins in the process.

Thankfully, you don’t have to take the unfair rates offered. With a fair and flexible ecommerce funding provider on your side, you can access capital with fair interest, flexible terms, and transparent guidelines.

MYTH #4: External funding will solve all your money problems

Make no mistake, ecommerce funding can help your store get back on its feet fast after a cash flow crunch, or give you the capital you need to invest back into the business at a pivotal moment for growth. 

But if your store has deeply ingrained money problems caused by issues like chronic deadstock, high debts, or low revenue, taking on ecommerce funding can worsen your store’s financial situation. 

You’ll need to pay back funds, plus interest — with no real strategy on how to keep up with the monthly repayments.

If you’re serious about securing external funding for your business, it’s always best to speak with an expert for an honest review of the state of your store so you can create a plan that works.

Ecommerce funding doesn’t have to be overwhelming. Learn how SellersFunding can help you grow.

The truth about ecommerce funding: How to make it work for and not against you

Ecommerce funding can be the missing piece to increasing your store’s growth in a short period of time. But we know what you’re thinking:

“Will the funding put my business at risk?”

“Can I afford this?”

And our personal favorite…

“What’s the catch?” 

These are all very real questions you’ll have to think about when looking to secure external funding for your business. And the right funding partner should be more than happy to help you answer them.

Because the truth is, with the right strategy and timing, you can use external capital to thrive in your business long-term. Let’s explore some of the ways to make the most of ecommerce funding.

Assess then strengthen your cash flow

To give your store the best chance of succeeding on its ecommerce funding journey, it’s important to take a good look at your current income streams. 

Aim to understand how things like seasonality and market outliers can affect your revenue, then create a strategy to increase sales performance. 

Improving your cash flow across the board will not only put you in a better position to repay external funding, it will also allow you to take on less external capital and reduce your overall risk exposure

Let fear make you a better investor

Believe it or not, not all fear is bad. 

In fact, this primal instinct can help you make more responsible investments with the capital you receive to help make your store even more successful.

To start, list all the reservations you have about taking the plunge into ecommerce funding. Then create some action steps to counteract them. 

For example, say you have a fear that monthly repayments will become too high during slow seasons.

To help create a plan around that scenario, you could:

  • Establish a cash reserve to cover repayments
  • Set a maximum spend limit
  • Liquidate stock to free up cash

With the right plan and approach, most of your biggest fears and risks can be accounted for so that you can feel confident in your decision.

Understand the different types of ecommerce funding

When it comes to ecommerce funding, your experience can only be as good as the funding product and provider you choose.

Take your time to select the type of funding that’s right for your business. 

At SellersFunding, we believe the best funding options for ecommerce businesses boil down to two core solutions based on your sales history, business model, and existing cash flow requirements.

#1. Daily Advance

With a daily advance, you effectively sell your sales at a discount to the funding provider in order to release cash early. This can be a gamechanger when you’re waiting weeks for your Amazon payout or your cash is being held to another marketplace’s strict payment schedule.

Risk is relatively low because repayments are based on how much revenue you make each month, not a fixed amount. Repayments are often made automatically, meaning you won’t have set monthly payments causing you even more cash flow headaches.

With SellersFunding, our Daily Advance allows you to access up to 90% of the previous day’s net sales and rates start at just 0.5%.

#2. Credit Limit

When you secure a credit limit you’ll receive a line of working capital you can withdraw from as many times as you need, and you’ll only pay interest on the amount you use. Plus, you can use the cash anywhere in your business, from buying inventory to hiring seasonal staff.

At SellersFunding, our Working Capital line of credit provides up to $5 million

with flexible withdrawals and terms of up to 12 months.

Pick the right funding partner

Make no mistake, the funding provider you choose can make or break your success with external funding. It’s essential you choose a reputable provider with funding solutions that can scale and grow with your brand. 

In case you’re wondering what look for in a provider, here are a few key qualities: 

  • Experience in ecommerce
  • Offers flexible funding options
  • Provides fair rates and fees
  • Integrity and transparency in all its operations
  • Offers resources to help you succeed
  • Provides hands-on support 

The best strategy to win at ecommerce funding  

Despite the many myths and misconceptions surrounding ecommerce funding, there is a light at the end of the tunnel. 

When you choose a modern funding provider with the knowledge and experience to match your ecommerce business’s needs, there’s no limit to the ways you can grow. 

So, don’t believe the hype. Fair, affordable funding is never out of reach for your growing store. With the right strategy and partner, you’ll be on the fast track to taking your store to the next growth level.

Looking for a reliable ecommerce funding provider? You’ve found one in SellersFunding.

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