A Comparison of Onramp vs Nontraditional Lenders

A Comparison of Onramp vs Nontraditional Lenders

After speaking with thousands of successful eCommerce entrepreneurs, we realized their most frequent pain point was frustration towards standard financing options. Not only are they slow, risky, and inflexible, they tend to under- or over-serve eComm business owners, who have a straightforward need for simple, adaptable financing solutions based on daily cash flow realities. 

They also haven't fared much better with the alternatives, many of which have even more strings attached and higher-risk repayment terms.

It's an issue that's left 84% of SMBs eager for more effective financial services, particularly those that offer three things:

  1. Affordable terms
  2. Instant approval
  3. Single-platform management

At Onramp Funds, we've watched these trends develop and positioned ourselves at the center of the fintech shifts set to fulfill these needs for eCommerce companies. Here, we'll explore what makes Onramp unique compared to other alternative lending sources available to eComm business owners.

What Is Nontraditional Lending?

Nontraditional lending encompasses a wide range of financing options not provided by banks, which require sizable credit and collateral requirements in exchange for big, lump-sum installment loans. For brick-and-mortar businesses operating with high overhead, this was par for the course—unless they wanted to take on high-interest credit lines or inflexible private merchant financing options.

Related: The Importance of Borrowing and Spending Only What You Need to Maintain Healthy eComm Finances

Today, such lump-sum, high-stakes lending practices are less attractive to eComm SMBs, which need quick, reasonable sums at opportune moments. Given that the vast majority of SMBs (83%) have moved some of their operations online, many non-enterprise businesses at large could qualify for more innovative eCommerce financing options. The question becomes, how do these alternatives compare?

An Overview of Nontraditional Lending Options

With poor cash flow blamed for 29% of failed startups, it's clear that new financing methods are necessary. SMBs seeking nontraditional financing usually have three nontraditional lending options available to them:

  • Credit lines, such as credit cards, a type of revolving loan
  • Private financing, such as from investors who may take some equity (and control) away from your company
  • Merchant cash advances (MCAs), which usually have tight repayment schedules and are often even more expensive than credit lines

Every option has its own unique pros and cons, and the difference between alternative financing sources can be as wide as the difference between traditional and alternative lenders.

Nontraditional Financing Options: A Side-By-Side Analysis

We'll compare the three most common nontraditional lending options listed above. It will then be clearer why Onramp's innovative approach gives eCommerce business owners the best of all worlds.

Credit Lines

For better or worse, credit lines are usually easier to get than bank loans, but they still heavily depend on (and affect) your credit score. The approval process is sometimes fast, but it's also not uncommon for applicants to wait for unknown periods of time, only to be denied—with nothing but a hard-pull credit check to show for it. Credit lines also don't take actual business performance into account, and use of the funds often involves complex limitations.

Like bank loans, credit lines are a form of debt financing, so they both have a negative impact on your accounting until fully paid off. On the plus side, debt-financing interest payments are tax-deductible—but why not avoid the debt and massive interest payments in the first place?
Compared to the smaller, more frequent cash injections characteristic of Onramp, credit lines carry a high level of risk.

Private Loans

With private loans, both large one-time investments and multiple recurring amounts (such as through crowdfunding) may provide more or less control over your business. While these cut the inflexible strings of debt-based financing, they come with their own share of other obligations.

For instance, they could jeopardize your operational independence if they give the lender equity ownership. These loans will still have more of a stake in your performance, but compared to Onramp, private loans compel a much longer-range view of business operations, whereas most eCommerce owners need much simpler arrangements based on the here and now.


For those wary of credit lines and unable or unwilling to secure private loans, an MCA may seem like the only other default option. While cash advances encompass a broad category, the most readily available MCAs have usually been highly opportunistic, knowing their clientele has few alternatives. As a result, merchants face interest rates and fees that can be much higher than even credit cards.

While a step away from debt-based financing and towards revenue-backed, on-demand cash, you're still somewhat at cross purposes with an MCA. Onramp, on the other hand, is firmly in your corner and considers your success essential to their own.

Where Else Can You Turn?

Gradually, services once provided only by MCAs are being fulfilled by eCommerce-specific financing experts who blend the advantages of hard-money cash advances with greater customization. Be aware that some of these options are invite-only and have tight prerequisites (like performance thresholds on select platforms).

Still, it puts you and your financing partner closer to the same page. Their purposes are more aligned with your own because they're usually interested in long-term partnerships. Depending on the source, though, you may not necessarily have lower fees than with the more standard alternatives.

Related: Why Use Revenue-Based Financing Instead of Debt Financing?

Until recently, most eComm-friendly financiers only offered set amounts with rigid repayment terms. Also, the majority of these companies are involved in numerous eCommerce functions, making dedicated support for their financing services harder to come by. Compared to the other nontraditional options, however, the best eCommerce financing partner is miles above the competition.

In the end, the prime question becomes: which type of merchant lender offers the most advantageous terms?

Adaptive, Revenue-Based Financing from Onramp

Modern third-party fintech tools eliminate the need to rely on lump-sum advances based on crude estimates of your medium-term revenue needs. Without debt financing, massive fees, or inflexible payment plans, our adaptable, revenue-based financing model keeps your cash flow from ever dipping into the red.

The core advantage of Onramp is our ability to correlate cash injections with the exact amount needed to cover your immediate costs. No estimating, no waiting. All you pay is a 1% fee of your actual sales.

Onramp's groundbreaking eComm financing tools integrate directly into your sales platforms, detecting your real-time cash flow needs and adjusting accordingly. Our system then automatically sends the funds to your bank, ensuring you receive cash injections in lockstep with your actual sales receipts.

The financing is flexible, matching your daily cash flow realities so you can replenish inventory or otherwise invest in your company's growth. With adaptive financing, Onramp scales with your business, removing the need for time- and attention-draining refinancing procedures and repayment schedules. You simply get what you need when you need it—for a fair price.

It's not every decade a new business resource comes along that simultaneously reduces costs and complexity. With Onramp, you gain everything while risking practically nothing.

Onramp: The Most Adaptive eComm Financing Solution Yet

Next to healthy cash flow, the most important asset any eCommerce business owner has is time. That's why Onramp can set your business up in seconds, with lightning quick qualification processes that allow you to integrate your store, link your bank account, and start receiving cash injections within 24 hours.

You'll only need to pay as you sell—if you don’t make money, neither do we. It's the most effective, risk-free financing solution modern eComm businesses have been waiting for. Take a bold step towards financial freedom and get an offer today. No credit check, collateral, or loss of equity required. Let’s get started.