(This is a guest post from our friends over at Payability, a technology firm that offers different financing options that give marketplace sellers daily access to cash.)
Running an eCommerce business has its share of perks — for example, you can set your own hours and be your own boss. But it also has its challenges, particularly when it comes to cash flow. For example, platforms don’t pay sellers their income right away, which makes it difficult to invest in more inventory, take advantage of big opportunities, or cover other business-related expenses.
Thankfully, these same platforms offer financing solutions that help sellers maintain reliable access to cash and get the funds they need to grow, and they make their financing decisions based on a seller’s account health — not just credit — making them more desirable than credit cards or traditional business loans.
Financing Options for Online Retailers
With that, here are six ways your account health can help get you the financing you need to grow:
Financing type: Merchant cash advance
What it is: A merchant cash advance product that provides funds to entrepreneurs using Shopify. There’s no application process or forms — if you’re eligible, Shopify will send you a variety of offers. You choose the amount and remittance rate that’s right for you, and if you’re approved, the funds will be deposited into your account. From there, Shopify takes a fixed percentage of your sales to pay back the advance.
Who it’s best for: Shopify Capital is currently limited to a small number of merchants in the U.S. They plan to expand the program over the coming months. If you’re eligible, Shopify will email you an offer with more information.
Financing type: Short-term loan
What it is: A business loan product for Amazon’s top sellers. It is a short-term loan that ranges from $1,000 – $750,000 with repayment terms of up to 12 months and rates that are lower than most credit cards and merchant cash advances. Repayment is made monthly and automatically — Amazon deducts what you owe from your account so you never have to worry about late payments.
Who it’s best for: Amazon Lending is an invite-only product. If you’re a registered Amazon seller with a proven track record for sales, you might see an Amazon Lending offer in Seller Central.
Financing type: Line of credit
What it is: A small business line of credit for up to $250,000 with 6- or 12-month payment terms. To apply, simply create an online account, provide basic business information and securely link your business accounts. Kabbage will then provide an offer based on your business performance. They look at revenue consistency and cash flow as well as your personal credit score. If approved, you’ll be able to draw from your line once daily as you need.
Who it’s best for: Small businesses who are at least one year old with a minimum of $50,000 in annual revenue or $4,200 per month over the last three months.
Financing type: Online commercial loan
What it is: eBay’s business financing partner, which provides funding for business owners to purchase equipment from ebay.com. There is a quick online application, quick funding, low rates and low monthly payments.
Who it’s best for: Since this is an online commercial financing product, Express is best for ecommerce sellers who manufacture their own products and may need to purchase equipment that’s for sale on eBay. You don’t have to be an eBay seller.
Financing Type: Small business loan
What it is: Small business loans from $500 – $100,000 for eligible Square sellers. There is a quick application process with funding as soon as one business day from approval. Payments are automatically deducted from your Square sales. Loans are subject to credit approval.
Who it’s best for: Online retailers who also have a physical storefront and sell with Square. Eligibility is based on your Square sales history and if you qualify, you’ll receive a notification via email and in your Square Dashboard.
Financing Type: Financing for marketplace sellers
What it is: Payability offers two financing options that give marketplace sellers daily access to cash. With their Instant Advance option, Payability buys a certain percentage of your future sales at a discount, giving you a large lump sum of cash up to $250,000. With Instant Access, Payability pays you your income one business day after making a sale. Both products work well alone, in conjunction with each other and alongside Amazon lending.
Who it’s best for: High-growth marketplace sellers who may have sacrificed their personal credit to launch their ecommerce businesses — after all, Payability does not do credit pulls or base underwriting on credit. Instead, decisions are entirely made on selling history and account health. They currently work with third-party sellers from Amazon, Walmart, Jet, Overstock, and more.
Receiving the financing you need is just one part of your eCommerce growth strategy. Check out some of our other top tips for growing your online business.
- Does your business need eCommerce automation?
- 5 B2B eCommerce Tips Every Seller Must Know
- Are Returns Killing Your Online Store’s Profitability?
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About the Author
Victoria Sullivan is a Marketing Manager at Payability. She has over eight years of social media, copy writing and marketing experience. Prior to joining the Payability team, Victoria developed social media content and strategies for top technology brands such as Skype and Samsung. She holds a degree in Advertising from Syracuse University’s S.I. Newhouse School of Public Communications. She can often be found in a yoga class or working on her fashion blog.