Ecommerce Business Funding

Our e-commerce loans are unsecured, which means there's no need to risk any of your business assets as security for your loan. Instead, a lender may ask you to provide a personal guarantee. The personal guarantee means that if you default on your payments, you as the business owner will be personally liable to repay any money lost. 

After taking out the loan, you'll be required to make scheduled monthly repayments at a pre-agreed interest rate. 

Ecommerce Industry

The rise in mobile devices globally has caused huge growth in the world of e-commerce. With mobile devices, people are buying and selling over the web more flexibly and passively. Also, fin-tech companies are transforming their payment methods, making transactions more secure and straightforward than ever.

What are the benefits of ecommerce finance?

There are multiple benefits of fiance for e-commerce, here are just a few advantages:

• Fast 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, 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 smaller 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 e-commerce 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.

1. 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. 
2. 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.
3. 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. 
4. 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.

• Premises
• Staff
• Development
• Hardware
• Stock
• Marketing

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 finance are available for ecommerce businesses?

Here is an overview of the finance options available for e-commerce businesses 

Mezzanine Finance

One solution may be mezzanine finance, which can bring in the support of experienced investors but avoids the risk of losing control of your business.

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.

Invoice Finance

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.

Merchant Cash Advance

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.

Stock Finance

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.

Equipment Finance

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.

Unsecured Loans

Once you have been trading for a few years, 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, 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.

Secured Loan

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.

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.

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.