5 Things to Know About eCommerce Funding in 2024

5 Things to Know About eCommerce Funding in 2024

eCommerce funding is one of the more transformative trends in the business world. Funding grew by 600% in 2021 alone, and it has become a more established part of running an online business. Much like conventional businesses use capital to invest in equipment, real estate, and materials, online businesses use capital to purchase inventory, afford 3PL services, and maintain a continuous stream of marketing campaigns. Online businesses can use eCommerce funding in 2024 to keep their business engines running in preparation for peak sales seasons.

If you have a new eCommerce business, are considering eComm funding for the first time, or want to take a more strategic approach to securing funding, don't wait until you need funding to pursue it. Instead, research your options and forecast how you can use funding to stabilize or grow your business. With these five things you need to know about eCommerce funding in 2024, you can better understand its role in your business.

Why Is It Time to Look Ahead to eCommerce Funding in 2024?

Your schedule is likely overflowing with holiday sales tasks: managing frantic holiday marketing campaigns, refining your inventory strategies, and handling customer queries. Basically, you're doing everything you can to secure new customers and grow your shopping cart sizes in 2023. So, with all of that on your plate, why does eCommerce funding in 2024 matter right now?

  • The eCommerce funding you use in the rest of 2023 to ramp up your marketing and fulfillment will impact 2024. If you choose financing with burdensome repayment terms, you'll compromise your future cash flow.
  • Waiting until you're in a cash flow crisis means you're more likely to rely on familiar options, such as credit cards, instead of branching out to less costly funding sources.
  • Some financing methods take a long time to get into play. This includes conventional business loans. While some alternatives are much faster, planning early gives you more time to research.

Taking time to read this article, consider different funding sources, and apply for an offer from your favorite options can set your business up for a successful year. It can even ease some of your financial pressures now. 

Start with these five things every online business should know about eCommerce funding in 2024.

1. Cash Flow Is One of the Most Important Factors for Your Business's Short-Term and Long-Term Survival

Many businesses prioritize other metrics: conversion rates, profit, ROAS, and CAC. All of these may be important, but cash flow is essential for keeping your business operational. Over 80% of small businesses that fail have cash flow issues, and monitoring your business's available cash is one of the most important steps you can take.

Related: Optimizing Cash Flow for High-Volume eComm Stores

It's important to consider your business's annual cash flow, daily cash intake, and net cash intake. These numbers can give you a lot of insight into your business's overall financial strength. Having sufficient cash flow determines whether you can take business-critical actions like:

  • Ordering small batches of inventory to keep your store open or ordering larger volumes at a more cost-effective bulk rate.
  • Maintaining paid ad campaigns to direct a flow of new shoppers to your storefronts.
  • Keeping your staff and team of contractors, even during off-peak seasons
  • Paying down debts, recurring costs, and overhead for your business

2. Most eCommerce Businesses Need to Develop a Small Business Capital Stack

The capital stack will have short-term, mid-term, and long-term financing options broken into debt and equity options. These funding types are ideal for different types of costs. For instance, you will have various expenses, including inventory, marketing and advertising, facilities, shipping, headcount, technology, and other operating costs.

There is no single funding option that is ideal for all of these expenses; therefore, a diverse capital stack is recommended to account for your various expenses as you grow. Here are the most common types of capital for online startups or small businesses:

Debt Financing

Bank Loans

Perhaps the most familiar type of funding is senior debt. Banks offer interest-based, multi-year fixed loans and lines of credit where you can spend the money any way you want but are required to make a minimum monthly payment or suffer a penalty charge.

Long-term loans have lower interest rates, and you pay off that debt over 20 or 30 years, much like a mortgage. Mid-term loans are generally 12 months and have higher rates (typically around 12%) than their longer term counterparts. While these loans are ideal to finance longer term assets, they aren't designed for short-term assets like inventory or marketing efforts. If you don't sell products to cover repayment, you can quickly rack up debt and run out of cash.

Banks and traditional lenders don't often offer a short-term option other than a line of credit, which requires proof of profitability before they'll even consider it. Once you have enough revenue in the bank, with a line of credit, you can borrow any amount from that line when you need it, but these are similar to credit cards or loans. You'll have to make minimum monthly payments whether you have revenue coming in or not, and lines of credit have fluctuating rates you can't budget for.

With all of these lending options, the approval process typically takes two to three months and requires you to provide a long history of financial and personal paperwork. The lending institution will review your financial history, credit score, debt-to-credit ratio, and business operations before approving or declining your loan application.

Business Credit Cards

Business or personal credit cards are relatively quick and easy to obtain and give you the freedom to spend as you wish, but they come with a credit limit and monthly minimums that don't care whether you have revenue coming in. While some offer attractive introductory interest rates, be aware that those rates often increase after the first year. Your rate will be based on your creditworthiness and payment history.

Your balance accrues with interest unless you pay off your debt in full each month. In most cases, you'll be granted larger credit limits with business credit cards than personal accounts, and you'll begin to build your business credit. As your business credit score increases and your payment history strengthens, the credit card lender is more apt to increase your credit limit.

Growth Capital Financing

Third-party businesses can offer your store a merchant advance. These cash infusions are typically based on past and forecasted sales volume, which makes them better suited to modern eCommerce businesses than conventional loans. These businesses will make the funds available for use on a specific marketplace platform or for any business use. They take repayment from your online store's incoming revenue. Different providers of eCommerce funding in 2024 will offer various repayment terms, restrictions, and rates.

Equity Financing


There are several stages involved with equity financing. Also known as seed capital, the first stage of financing is for startups. Seed capital is just enough money to cover the essentials, including a business plan and initial inventory. Its primary goal is to attract more financing, either from banks or venture capitalists who will want to see some operating history before they invest.

Once you show promise and stability, you can seek venture capital financing. Private equity financing is reserved for more established companies. For startups, venture capital is your best bet.

The biggest issue with these routes is that they're not easy to obtain, and you lose some control of your company. Even if you do get investors' attention, it can take up to six months to get approved and funded.


Bootstrapping is simply using your own savings (or donations from friends and family) and your company's cash flow (if any) to fund your business and its growth. Bootstrapping often leverages short-term funding solutions like credit cards and cash advances as the amounts are typically smaller and manageable for payoff over a few months. You retain 100% ownership of your company, but you have to maintain enough cash to keep it going. This may mean depleting your savings or retirement funds and increasing your debt, adding significant risk to your venture.

3. Balance Different Funding Options to Grow Your Business

There likely isn't a single funding option that covers all of your business needs from startup through growth phases. Even with eCommerce funding, you need to have some consistent sales under your belt before you can obtain financing. The key is to build the right balance in your capital stack to achieve your goals and provide the necessary cash at the right time.

Short-Term Needs

For short-term cash flow needs, such as maintaining proper inventory levels to meet demand, the eCommerce funding option is ideal. Consider this working capital that turns over every 60–120 days. It will provide you with a quick way to get the cash you need without all of the red tape and risk. For instance, if you see demand is outpacing supply, you can immediately purchase more inventory without worrying about increasing your debt.

One note with inventory: stockouts are one of the most dangerous threats to your business. If you run out of inventory to fulfill purchase orders, you significantly increase the risk of lost sales. Customers expect their products to be in stock and delivered to their door within a reasonable period. If you can't fulfill an order quickly, they will almost always go elsewhere.

This reality makes having working capital in hand essential. If you simply charge it to a credit card, unless you sell that stock before your payment is due, you aren't going to be able to pay back the borrowed money, and your debt increases. However, with eCommerce financing, you have peace of mind that you won't go into debt by purchasing inventory that doesn't immediately sell.

Mid-Term Needs

If your sales are strong, you can likely still take advantage of eCommerce funding for slightly larger purchases, such as hiring an advertising or marketing agency to promote your brand across different channels or investing in technology. Otherwise, you can look to credit cards, lines of credit, or short-term loans—but be aware that these are debt financing options that increase your costs over time.

Long-Term Needs

Long-term loans may be best to fund larger expenses as you grow, such as purchasing a warehouse, hiring an executive, or expanding headcount. In this case, traditional bank loans may be best as they are geared towards higher costs you can pay off over time. These will enable you to pay off the debt over an extended period, making your payments more manageable.

4. Major Store Platforms Often Offer In-Platform Financing

Major online marketplaces are getting in on the financing industry too. You may have already encountered financing options from Shopify, Walmart, or Amazon. These businesses will make offers to qualifying businesses, and sellers who follow up on their offers will be able to use that infusion of cash to make approved expenditures within the specific platform. 

Related: Why Online Sellers Should Choose eCommerce Business Loans

However, a major drawback is that you can only use the funds for those approved expenses. Also, each platform will make an offer based on your sales performance on that specific site in isolation. This means you'll likely get far less than a third-party funding source that looks at your total sales volume across multiple platforms.

5. 2024 eCommerce Funding Can Help Your Business Thrive During Slow Periods

Whether your busy season is now or six months away, you'll also have a slow season: a time when customers simply don't need as many of your products or when clients behave unpredictably and may abandon their usual shopping habits. During this season, your inventory and customer support costs may go down, but most of your other expenses will stay flat. 

When this happens, the goal for many businesses is simply to survive. They may draw on savings from the peak season to supplement slower sales and stay afloat. But with eCommerce funding, you can use this period to thrive. Your funding can help partially or wholly cover expenses like:

  • Ensuring your site is responsive and incorporates the latest mobile shopping features
  • Experimenting with generative AI content for continuous marketing across multiple channels
  • Better inventory management and analytics software so you can prioritize forecasting, business management, and granular inventory strategies

The slow period is an opportunity to strengthen your company's foundation but only if you have the money available.

Have the eCommerce Funding in 2024 You Need to Protect Your Business

Before 2024 gets underway, consider your current and future funding needs. By identifying how valuable eCommerce funding in 2024 can be and what forms that financing should take, you can start the process of applying for that funding and supplementing your current cash. At Onramp, we provide growth capital and merchant advances that eCommerce sellers can use for any business cost. You can repay the funds as a percentage of your sales volume so repayment never stresses your cash flow. Get cash before 2024 even arrives to start planning your financial business strategy.