How a Walmart Business Line of Credit Can Help Scale Your eCommerce Business

How a Walmart Business Line of Credit Can Help Scale Your eCommerce Business

Last year, Walmart Marketplace had over 150,000 sellers, a significant growth from their 91,000 in 2021. If your business has joined the ranks of Walmart Marketplace sellers, that means your business has an exciting new distribution channel for getting the attention of new customers, strengthening your brand, and increasing your revenue.

Selling through Walmart is already a great way to grow your business. But if you want to scale your growth more ambitiously, additional eCommerce financing sources beyond sales revenue can help. In this guide, we explore Walmart's Marketplace Capital Program, as well as alternatives to a Walmart business line of credit. Knowing the details of the financing terms and the repayment schedules will help you more strategically decide the best path forward for a stronger eCommerce business.

What Is a Walmart Business Line of Credit?

There are many different financing vehicles available to businesses today. While each one can provide access to fast cash for business growth or to stabilize your company, the details that make them different can have a significant impact on your business over time. To help you navigate through the various options available for financing business growth—especially if you're selling on Walmart Marketplace—here are three basic options and their quick, practical differences:

  • Business loan: Qualifying borrowers receive a lump sum of cash and are required to make scheduled repayment amounts (comprised of principal and interest) at fixed intervals, such as a monthly payment.
  • Line of credit: Qualified users have an amount of money at their disposal, from which they can make withdrawals (at a known interest rate) and then repay. This is similar to a credit card or having a loan "on hand" for when your business needs it.
  • Merchant advance: Rather than having a loan calculated based on your business's assets and financial strength, a funding provider will provide you with a lump sum of cash as an advance of your anticipated future sales. Repayments are tethered to future sales, often in the form of a holdback.

With those three definitions top of mind, it's much easier to navigate where to find a Walmart business line of credit, either through Walmart Marketplace or through other providers. 

Walmart offers a Walmart Marketplace Capital Program for qualifying marketplace sellers. This program operates like a merchant advance: your advance amount is based on your historical sales volume, and repayments are taken as a portion of your payouts. 

Alternatively, some merchant advance providers will offer advances that take Walmart sales volume into consideration without being affiliated with Walmart themselves. In standard eCommerce cash advances, these funding providers will assess your current sales volume through popular channels—such as Shopify; or Amazon—and integrate with that site for automatic repayment. 

Related: eCommerce Loans: Scale Up in 2023 With a Cash Advance for Your Business

If your preferred merchant advance provider has a Walmart integration, they can also take sales volume through that channel into consideration and potentially offer you a larger advance. Some service providers also have an arrangement similar to a line of credit: you can continually qualify for new advances and continually fund business growth without "stacking" loans or advances. 

Ultimately, your eCommerce business has two key options for a Walmart business line of credit: advances directly through the Marketplace Capital Program or merchant advances from third parties that can integrate with Walmart's platform.

What Can Walmart's Marketplace Capital Program Offer Your Business?

Qualifying as a seller on Walmart Marketplace, let alone qualifying as a participant in the Marketplace Capital Program, can give you a "You made it!" feeling that motivates you and your team. You can keep building that momentum by harnessing their funding program to buy additional inventory and power more sales. 

View Walmart's merchant advance program as an opportunity to scale faster than you might have managed through organic revenue growth that relied solely on sales. Take a look at the particulars of the program, as well as some of the most impactful benefits.

Walmart Business Line of Credit Program: An Overview

Walmart offers its qualifying sellers a new source of funding that is specifically built for the needs of online sellers trying to scale their business through Walmart's distribution network. Rather than offering a conventional-style business loan, Walmart is providing this funding as a cash advance: an immediate infusion of cash that's calculated based on the borrower's anticipated future sales. 

This program is designed to provide participants with enough capital to become more competitive in the marketplace and grow their business, thereby increasing Walmart's strength in the online space along the way. Both sides have the opportunity to benefit.

Here are the essentials of the program you need to know before pursuing it:

  • How it's calculated: The Walmart Marketplace Capital team assesses your business's current sales volume in the Walmart Marketplace. You'll receive an offer with a set cash advance value. 
  • The associated fees: Businesses that accept the cash advance will be charged a flat fee. This fee is a percentage of the total cash advance value and will be paid as part of the repayment installments.
  • How it's paid out and repaid: If you qualify for a cash advance and accept the offer, Walmart Marketplace will provide the funds through your account's payout payment processor. Repayments will be automatically calculated and taken from your payouts. However, if you don't have sufficient funds, Walmart Marketplace may debit your connected bank account.
  • How to qualify: Walmart Marketplace participants must be a US-based business, an active Walmart Marketplace seller for at least six months, and they must demonstrate a clear history of adhering to the Walmart Marketplace Seller Performance Standards. If you meet these standards, the program team will run a business risk assessment on your account.

How to Use It to Scale Your Business

Walmart Marketplace offers these advances to qualifying businesses in order to fund business growth. Some of the strategies with the biggest potential include:

Get a Pre-Holiday Sales Cash Infusion 

For many retail sellers, the last quarter of the year is by far the most profitable. In fact, many businesses see 20% of their annual sales in the "holiday season"—the four-week stretch between Thanksgiving Day and Christmas. But you have to have the funds for increased inventory and marketing before that big payday. If you rely simply on budgets from earlier in the year, you may be crowded out of the market or at least not reach ambitious new heights. Merchant advances give you that cash early so you can buy inventory, up your marketing, or hire temporary holiday help.

Expand Your Product Catalog 

Many eCommerce businesses focus on a core set of products. Diversifying too much, too quickly can water down your brand or spread your budget too thin to respond to market changes. However, with a merchant advance, you can test out selling strategies for accessory products, related goods, or new trends that seem like a great fit for your brand. More money at hand lets you respond faster to market shifts.

Expand Your Market 

If you have limited funds, you may only be able to negotiate with smaller suppliers or offer a very limited color and size range of your product line. But with a merchant advance, you have more leverage. You can buy bigger selections of inventory, opening the door to conversations with larger, more efficient or versatile suppliers. You can also use Walmart Fulfillment Services.

Nontraditional Alternatives to a Walmart Business Line of Credit

Of course, many of the benefits we’ve just explored aren't limited to cash infusions you get through Walmart Marketplace Capital. eCommerce businesses can also consider the potential of nontraditional financing options that are designed for the needs and sales cycles of online businesses. Consider these potential sources for scaling your eCommerce business:

Amazon Lending

Amazon offers sellers financing through its Amazon Lending program. Through this invitation-only option, sellers can accept a pre-determined loan amount based on their past sales performance. The loans are short-term, lasting from six to 12 months, and the interest rates can vary from 9% at the start to between 18% and 25% in future periods. Repayment is due through fixed monthly payments. 

Merchant Advances From Funding Firms

Merchant advances are a popular option. Funding Firms like Sellers Funding, Payoneer, and Shopify; Capital offer qualifying businesses a lump sum of cash with a factor rate of approximately 1.1—which is a fee of 10% of the cash advance value

Related: What Are the Differences Between eCommerce Loans and Other Small Business Loans?

The repayment schedule is fixed and may be a daily or weekly deduction from your sales revenue. However, the payment amount is a bit more fluid; it's a consistent percentage of your total sales volume. This offers you some potential relief from pending payments during slow months, but it can still jeopardize long-term growth.

eCommerce Financing

Other providers offer a more versatile form of merchant advances. Rather than complex factor rates, you will have 1% of your sales value collected from your revenue and automatically transferred as a repayment of the advance. This continues until the advance and its fees have been repaid. 

Because the repayment percentage is low and stable over time—adapting to your current sales— it doesn't present an obstacle to growth. Instead, businesses can simply use the advance to fund inventory, implement marketing campaigns, and accommodate other business expenses. As your sales volume goes up, you may qualify for additional advances, turning this kind of funding into a system similar to a line of credit, in practice.

Choose the Right Financing Strategy to Scale Your eCommerce Business

As you sell across more channels, opportunities for financing become more abundant, giving you new ways to scale your business growth. However, choosing the right one makes all the difference. Walmart's program, for example, offers multiple benefits—but only considers your Walmart Marketplace channel. Similarly, Amazon's lending program only considers your sales volume through its channel. Instead, consider a cross-platform merchant advance and eCommerce funding provider. 

Onramp offers flexible funding based on your sales volume across multiple different channels, including Walmart. Contact us today for a closer look at how our lower fees, more comprehensive integration, and partnership-minded initiatives can fuel your business's growth.