eCommerce Seller Financing: What Works for Your Business and How to Get Started

eCommerce Seller Financing: What Works for Your Business and How to Get Started

Small businesses rely on sound financial strategies to stay profitable in the long term. While business plans, organized strategies, and a popular product do a lot of the heavy lifting, simply having access to capital should be a priority for your business. After all, one in three small businesses struggle—or fail entirely—because they don't have the capital they need.

eCommerce seller financing options paired with effective selling strategies ensure your business always has ready capital for monthly expenses and growth opportunities. But because we're looking at financial strategy, finding the right option that fits your business' unique needs and overarching goals is important. Searching for an option in the middle of an emergency or picking the first type of funding you research can lock your business into expensive loans or restrictive borrowing terms. 

On the other hand, researching and assessing modern options built for the unique eCommerce environment puts you in a much better position—whether you need financing now or later. Read through this helpful guide to traditional financing options to see how some of the most common financing strategies stack up, and how you can methodically pick the right option for you.

Traditional eCommerce Seller Financing Options Don’t Fit Today’s eComm Businesses

Few eCommerce owners have the necessary capital to fund a new and growing business. eCommerce seller financing options are available, but many can set owners up for failure from the start. 

As your online business grows, you will have to cover more than just inventory—there are marketing and advertising expenses, operating costs, and website optimization overhead, to name a few.

As you dive into the eCommerce world, you'll find it can be quite a journey to get financing that works with you and not against you. Why? Because most financing options are stuck in the past, geared towards traditional sales models, and unable to adapt to the needs of online sellers. Fortunately, more modern financing approaches are changing eCommerce seller financing for the better.

How Traditional Financing Solutions Evolved Around Brick-and-Mortar Businesses 

Traditional financing solutions are inherently poor options. Some eCommerce businesses can use them strategically, but they were built for conventional businesses—restaurants, physical retailers, manufacturers, and other brick-and-mortar establishments. The loans are centered on the concerns that these businesses commonly faced: payroll, rent, and building or equipment purchases, for example. But they weren’t designed for marketing costs, 3PL and warehousing expenses, and other costs that keep online stores running. 

Related: Financing Options for Amazon Sellers

These loans also assess potentially qualifying businesses based on those conventional norms: how much capital do you have? What's your collateral? What do your books look like, and what's your financial history as a business? For many eCommerce business owners—even if you have years of success—online businesses simply don't translate.

Why You Need to Plan Ahead for eCommerce Financing

The adventure for the startup begins by determining your product, creating an online store, establishing a social media presence, creating impressive product pictures, and posting every day. But growing the business demands much more.

Different challenges may arise, like driving consistent traffic to your website, introducing potential clients to your products and services, and of course, generating conversions, which means sales.

Online platforms charge fees to post your product on their sites, often taking a cut of your sales or a monthly fee, depending on how much you sell. You must also have just the right amount of inventory on hand: too much, and you'll see your cash flow dwindle as it sits idle collecting interest, but not enough, and you won't be able to meet customer demand. Not an easy balance.

As your business begins to scale, keeping up becomes a constant challenge. The biggest risk to eCommerce sellers is running out of cash and inventory. Yes, there are financing options, but those traditional options often involve mounds of paperwork and lengthy approval processes – forcing you to wait. 

Loans, lines of credit, and credit cards can charge high interest rates and require monthly minimum payments. What happens if sales go down unexpectedly and you can't pay? You can end up in a hole—quickly. 

Cash Flow – Right on Time

As eCommerce continues to grow, eComm businesses have an excellent opportunity to grow alongside it—provided they have the right funding for capital, inventory, and marketing. The industry reached $5.2 trillion in sales just in the United States in 2021, and market experts anticipate it growing to a towering $8.1 trillion by 2026.

While the market is expanding, there's still tight competition for consumers' attention and loyalty. This can lead to high entry and growth costs, but, even more concerningly for sellers, it can lead to ebbs and flows in monthly sales. The best way to protect your business is by prioritizing cash flow. Accessible cash when you need it, whether through revenue or financing, can keep your virtual doors open or let you pivot to new markets without losing your stride.

What About Cash Flow Right at the Start?

The trickiest time for eCommerce businesses is when they're new. You may not have a source of funding yet, and you don't have clear revenue models. Securing funds (especially through conventional means) can seem impossible. Here are the steps and what to consider as you get your online business off the ground:

1. Research 

Take time to research how online selling works, eCommerce seller financing options, and what you can do to set yourself apart. You can find plenty of online resources, such as webinars, classes, and in-depth articles. 

eCommerce is highly competitive, so keeping up with constant changes is vital to progress. Spend time learning about the newest marketplace trends so you can make the best decisions for your business, such as which products to sell, how to market and price them, and how to leverage online reviews.

2. Develop the Right Areas 

Even if you are a one-person shop, it’s necessary to partner with the right team, like professional developers for an excellent website, or graphic designers, photographers, and content creators for blogs and social media to promote your products and brand.

Since there is an exchange of confidential information in eCommerce, data management must also be a priority. The image of your company is just as essential as the users who purchase your services and products, so take steps to ensure every element of your eCommerce business is appropriately secure.

3. Leverage Available Tools

There are plenty you can find on the internet—depending on your brand's needs or your team's goals—that will make your life easier. A few well-known platforms include:

  • Shopify; makes it possible for you to sell from anywhere. Besides your own eCommerce store, Shopify; supports third-party marketplaces, social media merchandising, and sales in person with Shopify; Point of Sale (POS) software.
  • WooCommerce has everything you need to add eCommerce capabilities to WordPress. It integrates with popular payment platforms like Stripe, Square, PayPal, Amazon Pay, and more.
  • Shipping Easy helps automate shipping processes if you are doing your own fulfillment.
  • Wix offers a simple website builder.
  • Canva is ideal for design teams.
  • Buffer facilitates social media engagement and aids with follow-up.

Most of the choices offer a free trial before making a purchasing decision.

4. Prioritize the Customer Experience

One of the benefits of selling on Amazon, Etsy, or other online seller platforms is that you don't have to worry about the user experience – that's their job. But if you sell on your own website, the customer or user experience is the key to the success of an eCommerce website, and you need to plan on investing cash into it.

Turning new customers into repeat customers (and repeat customers into loyal customers) is an ongoing challenge. Listen to your customers, invest in improvements, and continue to evolve to meet their demands and expectations. And don't forget to keep an eye on the competition. How does your website experience compare?

You may also want to hire additional help. Customer service is critical and a good place to begin, as being responsive to customer requests and issues goes a long way to retaining customers. When a potential client visits your website, try to provide customized attention that ensures security and trust. 

5. Think About Price and Shipping

Maybe you’re wondering how to reduce shipping costs when eCommerce giants like Amazon offer such attractive shipping deals. Buyers have become used to rapid, free shipping, forcing online sellers to seek ways to reduce shipping costs to compete. Amazon has changed the game; two-day shipping is now the expectation.

How to Pick Your Preferred eCommerce Seller Financing Method

Opening the door to seller financing is a big business decision. The terms, costs, and possibilities of the financing method can change the course of your entire eCommerce business for years to come. So, like with all major decisions, it's important to follow a clear process. You should: 

  1. Assess your business's short-term and long-term financial needs.
  2. Review your options to see which ones offer the criteria you need.
  3. Begin the approval process.
  4. Reassess your business needs over time.

Let's briefly explore those first two steps:

1. What Does Your Business Need?

Before deciding on a financing option, ask yourself these crucial questions.

  • What am I looking to finance?
  • How much do I need and when?
  • What fees and additional costs can I afford?

Knowing the answers to these questions can help you start your search with a firmer grasp of what will work and what won't.

2. What Are Your Options?

There are multiple types of eCommerce seller financing options to help you finance your business. Some of the most common options you'll encounter include:

Short-Term or Long-Term Business Loans

These are conventional sources of financing. Short-term business loans are typically used as emergency funds for payroll, repairs, or other immediate but short-term needs. Long-term business loans are typically used for growth, such as the acquisition of new property and equipment.

Like with most standard loans, borrowers will need to repay the loan in monthly installments of principal and interest.

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

If you decide to work with a bank, be ready to provide detailed personal, financial, and business information. Putting all of this together can be time-consuming, and even when you accomplish the task, underwriters often ask for more. Expect to wait 30-60 days before knowing if you are approved.

Credit Cards

This can be a risky strategy depending on the APR of your credit card and the amount you want to borrow. Many credit cards offer attractive introductory interest rates, but they don't last. You could be looking at double-digit rates in no time. However, business cards don't place many limitations on what you can or cannot purchase with the funds.

Repayment is on a strict monthly schedule with potentially severe penalties for late repayment.


Crowdsourcing can get you cash, but it's not a reliable or consistent source of funds. These campaigns can be unpredictable, and there’s no guarantee you’ll reach your goals. This can make it hard to plan and budget appropriately for your business’s future. It can also take time to accumulate enough to make a dent.

Merchant Cash Advances From Funding Firms

This financing structure gets you a lump sum of cash upfront, with the associated fees being measured in a factor rate rather than an interest rate. Companies like Shopify; Capital, Payability, Payoneer, and others offer funding to qualifying businesses and charge a factor rate of approximately 1.1 (making the cost of a $100,000 advance approximately $110,000). There are also restrictions on what the funds can be used for.

Rather than paying the money back in fixed installments, payments are pegged to incoming sales value. Some models of merchant cash advances offer more financial flexibility and growth potential than others. Common differences include:

  • Repayment percentage: One business may charge 1% of incoming sales value, while others may charge much more.
  • Repayment pace: Different options will take the percentage on a daily, weekly, or monthly schedule.
  • Funding application restrictions: Depending on the provider, you may face restrictions such as only using the funding for payroll, marketing, or other specific areas. Other providers are less restrictive so you can use the money as you need.

Key Questions to Ask Yourself as You Consider Different Options

Dig into the details to determine how valuable or restrictive each program is. You or your team should ask:

  • What do I need to qualify? 
  • How does it work? 
  • How much will this cost me?
  • How fast do I get the money?
  • What eCommerce expertise can they provide? 
  • What are the true costs?  Are there hidden fees?
  • Ultimately, are they making money even when you don't?

A More Modern Approach That Aligns with eCommerce Sellers' Business Model

One of the most cost-effective ways of getting working capital for eCommerce is through innovative financing models designed specifically for online businesses. They are purpose-built to align with the unique cash flow timings and requirements of the eCommerce industry.

Merchant financing with a provider that cares about your business’ success gives you access to quick cash infusions without loan terms that become obstacles to business growth. Unlike credit cards or traditional methods, you don't repay until you sell your inventory, and you don't actually send a payment. They are connected to your online store and bank for automatic deposits and withdrawals. Hassle-free and on-demand.  

You won't have monthly bills, nor late fees, varying interest charges, or minimum payment worries: just the security of knowing the money will be there when you need it.  eCommerce is turbulent, so find an option that provides the cash for managing the ups and downs.

Onramp is a company that focuses on your business interests. Our performance depends on your success. We prioritize partnering with our clients and helping them achieve their dreams by offering real one-on-one personal service. At Onramp, you are not just a number—we are ready to join you on your journey. Contact us today to learn more about eCommerce seller financing or to get qualified.