Securing Interest-Only Ecommerce Finance for Fast-Growing Business

The COVID-19 pandemic and subsequent lockdowns led to a huge surge in ecommerce spending. For most online retailers, this was an opportunity to grow in a way they’d never experienced before - but one that carried significant upfront costs and new cashflow constraints.

For businesses that began on a smaller scale, the sudden leaps made possible by this huge customer demand required a series of expensive, one-off investments such as increased staffing, stock-holding facility, inventory purchases, branding, packaging etc. 

A client who ran a business experiencing a growth surge contacted Rangewell to discuss their finance requirements. The ecommerce business, which had started as a simple dropshipping venture, was now flourishing, but the client needed to make some one-off purchases to facilitate customer demand better and hold stock in UK warehouses - leading to significant cashflow constraints. 

To rectify this, the client wanted a finance agreement that minimised early repayments to allow the business to utilise as much of the finance as possible to fund their cash flow requirements. Once these costs were paid, the client expected to start generating even greater profits which would make repayment simple. They approached our ecommerce finance team, who listened to their requirements and then developed a detailed plan of action to approach a number of appropriate lenders. 

Why we were able to help

The client’s one-off costs were significant, but they all made sense to the growing business and had been accommodated in a business plan. Our finance experts reviewed these plans in detail, then suggested an independent accountant who helped project the profits made possible by these one-off costs - and explain them to lenders in more detail.

Once the client was ready, Rangewell shortlisted a number of specialist ecommerce lenders who understand the market and the unique situations many ecommerce businesses face. The client selected a lender who offered them a term loan with interest-only payments for the first eight months. An interest-only period means only making very minimal repayments during the given window.  

This loan meant the client could focus on their one-off costs as their business enjoyed its best rate of growth yet. During this period, the client was able to utilise customer purchase revenue to reinvest in stock whilst using the loan to fund the one-off costs, preventing any impact on their business. 

Once the one-off costs were accounted for, the client’s repayment plan returned to a standard structure - but they now had the infrastructure and stockholding they needed and could utilise their increased profit to repay their loan. 

About interest-only ecommerce finance

Interest-only loans can be appealing: after all, they present an opportunity to generate a large amount of capital and only have to repay small amounts for the interest-only window. However, they are also dangerous if your business fails to plan properly. You may, for example, spend your loan and then fail to generate enough revenue before the interest-only period ends, making repayments very difficult. 

Here at Rangewell, we work with ecommerce businesses just like yours to navigate the lender market and find the right loan for your needs. We won’t suggest interest-only unless it makes sense for your business, and we’ll explain why it does or doesn’t. In this client’s case, the terms were a perfect way to fund their larger investments in stock and warehousing which then paid off through increased customer sales that made repayments easier to achieve. 

If you’d like to learn more about ecommerce finance and how loans can be offered to suit your specific business needs, contact Rangewell today. We offer a no-obligation consultation and can help you find the perfect loan for your growing business, whether that’s interest-only or on different terms.