Non-Bank Lending Options for eCommerce Businesses

Non-Bank Lending Options for eCommerce Businesses

If you've been running an eCommerce business for some time and need funding, you might think a bank is the most logical place to find financing.

However, suppose you make an appointment at a bank to discuss funding. In that case, you'll quickly find that funding an eCommerce business is a non-starter for all traditional banks.

Banks can't usually lend to online businesses because they aren't equipped to assess the risk accurately, measure business performance, and typically want collateral.

So what is a growing eCommerce business like yours to do? 

Well, you need funding to make it in today's eCommerce landscape.

Luckily there are options:

Enter non-bank alternative funding.

They're a way to get funding for more modern-style businesses. In your case, this would be an eCommerce business.

Let's review some of these popular alternative funding options if you can't get financing from a traditional bank.

Revenue-Based Financing aka Merchant Cash Advance

Revenue-based financing, aka the merchant cash advance, is a newer unique form of funding tied closely to your business's revenue.

It looks at revenue to determine the possible loan amount and how repayment is structured, and repayment fees are typically based on a percentage of revenue.

Another way it utilizes revenue is that your lender will look at how much you make on a pay-out period. If it's lower than usual, they will lower your minimum payment and raise it a bit once sales increase.

In this regard, revenue financing is highly flexible, allowing eCommerce businesses to access cash but not get put in a situation where they are short when the bill comes.

Onramp Funds is an example of a revenue-based financing system. Give us a try if you're looking for eCommerce funding; cash amounts can be approved as fast as one day, with funds in your bank the very next day.

Quick overview of Revenue Based Financing

  • Approval Process: Based on business metrics, mainly revenue
  • Requesting repeat funds: Quick review of business metrics to see cash amount
  • Fee: Based on a percentage of sales or incoming cash
  • Minimum payment: Minimum payment can rise/fall depending on sales volume
  • Repayment Schedule: Usually 2-6 months to pay off the balance

Line of Credit

A line of credit functions similarly to a credit card in that you will always have a "balance" you can pull from for quick funds, but you're best off paying it quickly, or the fees will start to pile up.

Lines of credit are most valuable when you need a quick cash injection that you can comfortably pay off in 1-2 months.

For example, if you're a bit short on covering your remaining balance and still need to pay for the freight, but you don't want to wait for sales to pay out so you can ship your goods, then a line of credit would work well.

A quick chunk of cash from an emergency line of credit can help you cover those time-sensitive expenses.

Afterward, you can clear off the balance with sales you're already making in a few weeks.

Lines of credit have the same weakness as credit cards in that fees can be overwhelming if you take a long time to pay off your balance if you leave it open too long.

Don't take a line of credit unless you are confident you can pay it off quickly.

Quick breakdown of how a line of credit works:

  • Approval Process: Business metrics approved for a credit limit
  • Requesting repeat funds: Pull the funds at any time after first approval
  • Fee: Charged a fee on existing remaining balance 
  • Minimum Payment: Extremely low, but fees will be higher the longer your balance is out.
  • Repayment Schedule: As long as you like, but best to pay it off in 1-3 months

Unsecured Loans from an Online Lender

An unsecured loan from an online lender works effectively the same as a loan from your bank.

However, these online lenders understand eCommerce businesses and how they work, which equips them to assess risk better than a traditional bank.

These loans are typically unsecured, meaning that you don't have to put up collateral or give up a percentage of your business to get approved for the loan. However, the bank will take measures to recoup their funds if you fail to pay them (as will all financing types).

Since these function like bank loans, you'll get an approved amount, an interest rate (typically represented by APR), and scheduled payback terms (typically 1-3 years paid monthly).

Quick breakdown of how unsecured loans work:

  • Approval Process: Look at business metrics, can take 3 business days up to 10 business days
  • Requesting repeat funds: Must reapply every time funds are needed.
  • Fee: Interest fee calculated using APR
  • Minimum payment: Divided evenly among repayment schedule + APR
  • Repayment schedule: Typically 1-3 years
  • Functions much like a traditional bank loan


Now you know the most common ways eCommerce businesses get funding today. There are other ways, but they are either not as reliable (things like grants) or are not sustainable (credit cards and borrowing from friends/family).

Look where your business currently stands and see what funding makes the most sense. You can utilize different kinds of financing at different times. 

However, ensure you don't take out too much cash and have to borrow more while you still have a balance to pay.