Ecommerce business loans can help start your online operations, or grow your business to new levels by using extra cash flow to enhance your digital storefront, financing inventory, and paying for other expenses to meet demand. We’ve evaluated the best e-commerce business loans based on loan terms, fees, rates, customer satisfaction, and overall quality.
If you require cash due to a cash flow shortfall or have a less than perfect credit score, American Express Business Blueprint™ could be a promising option.
Fundera does not lend money directly but offers a digital marketplace where you can connect with lenders to provide a financing solution for your business.
National Funding offers small businesses working capital and equipment financing loans that are suitable for a broad range of businesses, and you could receive approval and funding within 24 hours.
E-commerce business loans are ideal for companies that sell products online and in physical stores. It’s designed to help you increase your sales through improved customer service and marketing campaigns. You can also use the money to expand your inventory or upgrade existing technology to keep up with growing demand from customers.
Types of e-commerce business loans
Here are a few types of e-commerce business loans:
Business term loan: A business term loan is provided as a lump sum upfront. It allows you to borrow money for a fixed period, such as one or two years. The interest rate on these loans is usually lower than other types of loans, and you’ll have to make monthly payments.
SBA loan: The SBA Small Business Administration (SBA) loan program provides financial assistance to small businesses through participating lenders in the form of loans, loan guarantees, and counseling services.
Business line of credit: A business line of credit is an agreement that allows a business to borrow money as needed, up to a set limit. When you need to make a purchase or pay a bill, you can draw funds from your account as needed, up to the amount you’ve agreed upon with your lender.
Invoice factoring: Invoice factoring is when you sell your business’s unpaid invoices at a discount, typically around 90% of their value. The factoring company will pay you immediately but you’ll incur a fee as time goes on if payments are not collected. The factor will keep any unclaimed funds as collateral until then.
Merchant cash advance: A merchant cash advance is a short-term loan that allows you to get immediate cash for your business. It is typically based on your future credit sales.
Why should you get an e-commerce business loan?
There are many reasons why you should get an e-commerce business loan. Here are some of the most common ones:
Business credit will improve: Getting a business loan will improve your business credit score and help you get better terms on future loans.
Improves business adaptability: Business lines of credit are flexible and versatile tools that allow businesses to adapt quickly to changing market conditions. They are also an effective way for companies to grow their operations whenever they need money for expansion or other purposes. These loans can be used for any purpose that improves operations or increases profitability—even if it’s just buying inventory or equipment needed for growth.
What are e-commerce business loans used for?
E-commerce business loans can be used to fund a variety of expenses. Here are some common uses:
Cover various marketing expenses: Many e-commerce businesses use their loan funds to pay for search engine optimization (SEO) and pay-per-click (PPC) advertising. These marketing tactics can help your site gain more exposure, leading to increased sales and revenue.
Upgrade your website: You may want to use your loan funds to upgrade your website to look more professional and have better functionality. This could include adding features like product comparison tools or social media integrations.
Pay for operational expenses: Operational expenses include employee salaries and benefits, office supplies, and utility costs. E-commerce business owners often use their loans to cover these costs when they cannot generate enough cash flow from their sales revenue alone.
Purchase inventory: Buying products to sell on your website is a key part of any e-commerce business. You need to have inventory in stock to fulfill orders and satisfy customers. You’ll have trouble growing your business if you don’t have enough money to buy the inventory. An e-commerce loan can help you purchase inventory and grow your business.
How to choose the best e-commerce business loans
Here are some tips to help you choose an e-commerce business loan:
Figure out how much you need: Before you apply for a loan, you need to figure out how much money you need. You will have to repay the funds, plus interest and fees. It’ll have to fit your cash flow projections.
Interest rates and fees: The interest rate is one of the most important factors when choosing a loan program. Some lenders offer fixed-rate loans, while others offer adjustable-rate loans.
Repayment plan: The repayment plan for your loan is very important because it dictates how much you will have to pay each month and how long it will take to pay off the entire loan amount. The repayment plan options vary with each lender and may include fixed payments over a set amount of time or adjustable payments based on your earnings.
¹All businesses are unique and are subject to approval and review.
