The term 'electric commerce' (e-commerce) refers to a business model that allows companies to buy and sell goods over the internet.
Unlock Funding: eCommerce Finance Experts
Whole of market eCommerce funding - Loans from over 30 lendersSpeak to one of our experts020 4525 5312
Flexible eCommerce Finance
- Any Business Use
- Simple and easy to arrange
- Loans up to 5 years
- Borrow larger sums - £250,000 or more
- No Personal Guarantees required
- Simple and easy to arrange
All Types of Funding
- Inventory Finance
- Trade Finance
- Working Capital
Ecommerce Business Funding
Rangewell are the eCommerce funding experts and we work with the widest range of loan providers
Funding an eCommerce business can be expensive. This is why we offer bespoke business funding and loans for all types of online retailers - we'll work with you to identify the right finance for your eCommerce business
Table of Contents
Funding for the eCommerce Industry
The world of e-commerce continues to grow rapidly and often the only things stopping successful eCommerce busineses growing is the lack of cashflow or finance to buy stock, advertise and increase their working capacity.
Many of the eCommerce loans that the funders Rangewell work with offer are are unsecured, which means there's no need to risk any of your business assets as security for your loan.
In some cases you will not be required to provide a personal guarantee either - although this can lead to finance charges being slightly higher .
What are the benefits of eCommerce finance?
There are multiple benefits of fiance for e-commerce companies:
- Faster growth: We know that your business will need to take advantage of the new opportunities as soon as they arise in a rapidly changing marketplace. Fast business loans can be obtained from lenders who have experience in the e-commerce market. Lenders will look at your credit score and history to give you an instant decision. The lenders will usually give you a credit line to access on the same day as you apply.
- Stock purchases: Whether you trade on eBay, Amazon, Shopify or Magento, lender's systems can integrate to analyse your online accounts to assess trends and your affordability immediately.,
- Working capital finance: Like all businesses, you'll need to reserve cash to buy more stock and meet obligations such as wages, tax, and other bills. So having a line of credit when you need it can be vital in growing your business.
- Trade finance: If your business imports goods from abroad, lenders can assess your eligibility for trade finance. Lenders will assess finance for stock purchases based on the credit profile of businesses in your supply chain.
Many finance options are available to e-commerce businesses, so speak to Rangewell to understand which options best fit your needs.
How does eCommerce finance work?
An e-commerce loan is a type of financing for online retailers. Online sellers don't tend to hold physical assets such as stock in high street stores. Therefore, these loans are generally unsecured ad they come as a lump-sum payment or as a line of credit.
Generally speaking, your lender will provide the loan to the seller. The seller will then pay back the lending company on an agreed time scale by using revenue from sales on the e-commerce platform they're using.
The applicant will assess the feasibility of the application. By doing so, the team can perform a risk analysis.
Your lender will typically want to see:
- Yearly turnover
- Cash flow over the past 12 years
- Stock analysis
- Sales performance
All lender's criteria will be different, so speak to Rangewell's e-commerce finance experts to find out more.
What are the requirements for an eCommerce business loan?
To avoid a last-minute scramble when applying for an eCommerce business loan, there are key documents that you should gather when approaching a lender.
Firstly, you should ideally apply for a loan before you need it. It would help if you had an idea of the lender's requirements before committing to a loan. You'll need to have the following documents on hand.
- Credit score: The lower the credit score, the higher the risk, but this doesn't mean to say you won't qualify for a loan if you have an adverse credit score. Businesses can check their credit scores online but may have to pay a fee to access a full report.
- Annual revenue: Make sure you have accurate financial statements over the past two years. Many lenders will ask for copies of your bank account transactions so they can confirm cash flows that are reflected on your statements.
- Updated business plan: The lender will want to know how your loan will be used and how the company plans to grow, so ensure you have a ready-to-go business plan available. It should also include a plan on how to pay the money back.
- Additional collateral: You'll need to provide a personal guarantee to the loan, or you can pledge additional collateral such as personal real estate or other financial resources.
There are many finance options available to e-commerce businesses like yours, so it's important that you understand which options best fit your specific plans.
Before you start contacting banks and other financial institutions, you should understand which of these costs will affect your business and the kind of sums you will require. You will need a concrete business plan, projections for the next few years, and detailed plans on how you will use the money, as well as tax records and financial statements from previous years when you have been running a business.
What can eCommerce finance be used for?
This form of revenue finance solution can be used to fund various business expenses to help with growth. eCommerce funding works by granting an advance based on future sales, and repayment is then taken as a fixed percentage as they happen.
What types of business loans are available for eCommerce businesses?
Here is an overview of the finance options available for eCommerce businesses
Working Capital Finance
Like every business, once you are up and running, your online enterprise will need cash to buy more stock and meet obligations such as wages, tax and other bills.
Working capital loans can cover your everyday operating expenses, such as suppliers' invoices and payroll. They are short-term loans that provide the cash lump sum you need quickly and can be paid back in a matter of months. They can be vital even for thriving businesses and are especially useful if you have slow-paying customers, seasonal business downturns or during periods of growth.
Having a line of credit to access when you need – and that you pay for only when you use it – can help make the most of your cash flow. An overdraft replacement facility, as its name suggests, could provide the convenience and flexibility of an overdraft without the need to involve your bank.
Stock, in any form, is an expensive commodity and, if you hold stock in your business, it means less cash to operate, fund initiatives and drive growth.
Stock finance, also known as inventory finance, is a funding solution that lets you release the working capital tied up in your stock before you sell it.
The funding works by having a lender purchase stock from your business and repayment is made when the stock is sold on. How much funding you can access depends on the type of stock you are looking to release cash against, and whether it is basic raw materials, work in progress or finished goods, ready for sale.
Once you have a trading track record, funding can become easier to obtain and your priority may be to take advantage of new opportunities as soon as they emerge.
Unsecured loans provide sums from a few thousand pounds upwards (we have funders that can over £1m+ lending facilities), and they can be provided in a matter of days - or even in hours in the case of smaller loans.
They are simple to arrange and the lender will make their decision based on a number of factors, including the credit rating of your business. Unsecured loans can be arranged over a period of time to suit you, often between 1 and 60 months. Remember, the lender will expect a personal guarantee from you and your partners and co-directors, which will mean that you would be required to make the repayments if your business could not.
Growth Capital Funding
Whatever size your e-commerce business is now, if you need to use your profits to invest in growth, that growth could take a very long time. It's important to move fast online, and one solution is to use Growth Finance.
However, external funding will also bring challenges. Equity investment may mean that you are no longer the sole owner of your business, and you may no longer have full control over it.
One solution could be growth capital funding. This can provide large sums to support your growth plans - but based on borrowing. It means you won't have to sacrifice equity or control of your business.
Solutions are available for virtually any size of business and you can use the funds in any way you need to achieve your growth plans, whether they involve expansion, acquisition or new product development.
Shorter Term Finance Alternatives
If you give credit to customers so they are able to pay you later, your funding options could include new types of invoice finance that can be done online.
You could also consider a merchant cash advance. Most of your online business will be done with customers who use their credit or debit cards, this can be your ideal solution. Your cash advance is paid back automatically with a set percentage of every credit card payment you take going straight to the lender.
It means customers are repaying your cash advance for you, every time they pay with a card.
Your team will need high-specification computer hardware and specialist software.
Hire Purchase and Leasing can help make virtually any type of equipment affordable by letting you spread the costs and make monthly payments. At Rangewell, we can often undercut funding offered by equipment suppliers or which let you take advantage of the lower costs of pre-owned equipment.
If you want to borrow a large sum, you will probably need a secured loan. These can be tailored to your business with repayment terms to fit your turnover and budget. However, you will need to provide something - like property - to use as collateral.
Ecommerce Finance from Rangewell
You need to get a combination of both expert support as well as funding to start to scale your business.
At Rangewell, we work with lenders across the market and know the key providers who can help with e-commerce funding. Our knowledge can not only help you secure the funding you need - it can help you secure it fast. Find out more about the finance options available to your business today.
Last update: 23 July 2023
Frequently asked questions
Have a question?
It's estimated that 50% of all startups won't survive the first 5 years, and the lack of access to capital is a significant barrier to success. The first step to securing the right kind of businesses loan is to understand the e-commerce funding available. If you're looking to purchase new equipment, stock up on inventory, or wish to boost your advertising - ecommerce business finance can help.
Typically monthly repayments and loan terms will be from 6 months to 5 years, depending on your business needs. Our team of experts will aim to have a decision over to you in 24 hours!
Your business will be eligible for an e-commerce business loan if you are:
- Registered and trading in the UK
- Have been actively trading for a minimum of 6 months
- Have a minimum turnover of £5,000
- You or the business owner is over the age of 18
Speak to Rangewell to find out more about e-commerce business finance.
Download Rangewell’s free and detailed guide to E-commerce Finance
How does e-commerce finance work?
Why type of funding do you need for your online business?
What are the costs?
What are the restrictions?
The downsides of e-commerce finance
Download your Rangewell Business e-Book
Available in ePub, mobi and .pdf format
You may be interested in...
It is easy to think that most consumers start their online shopping sessions with a search with Google, but Amazon is ac...16 March 2022
This article aims to guide you through the practical and financial steps to freeing up cash.8 March 2022
Keep reading to learn all about purchasing inventory.3 March 2022
Find out about ecommerce merchant cash flow in this guide and keep your business going whatever happens.28 February 2022