Business Funding for Shopify Businesses

Over 90% of UK shoppers made purchases online in 2020, and their expectations are only getting higher. From free delivery to discount codes, sales events and unlimited returns, consumers now expect great customer service - and they aren't afraid to let people know if the seller misses the mark.

So, how do you ensure your Shopify shop lives up to the ever-increasing consumer standards while keeping costs low and profit margins high? Let's talk about how Shopify finance can help support operational costs and even realise your growth plans. 

Types of Shopify Finance

Finding and securing the right ecommerce finance can be a complex process as there are so many variables to consider. As an online retailer, you may sell your wares across several platforms, such as Amazon, eBay, Etsy and even your own Shopify store. As a result, your revenue is split across these platforms, and only your full business accounts can really show the full picture of your performance. For that reason, platform-specific funding products, like Shopify Capital, may not be right for you - more on that later.

In addition, since ecommerce businesses tend to have minimal assets, you may find that an unsecured loan, merchant cash advance or growth capital funding are all better options for you rather than a traditional business loan that needs to be secured against an asset such as property.

And finally, there are many ways in which ecommerce finance can really transform your business plans and relieve pressure from your day-to-day operations. From specialist ecommerce stock finance through to short-term bridging loans and invoice finance, there might be a specific need you have that can be met by the right finance solution. 

Here are some of the most common types of finance available to Shopify sellers:

Secured and unsecured loans

As we've already discussed, the difference between secured and unsecured loans is how the lender guarantees their loan. As the name suggests, a secured loan is typically secured against a property or another significant asset, so this might not be fitting for ecommerce businesses that don't have brick-and-mortar stores and you don't want to use your own home as collateral.

An unsecured loan is more flexible and typically secured against other factors, such as projected revenue. Of course, lenders need to guarantee their finance, so with unsecured loans, they may ask for a percentage of your income or business value if you are unable to meet the necessary repayments.

Stock finance

Stock finance, also known as inventory finance, can cover a number of different types of finance products that you invest in the purchase of additional stock. Ideal for businesses operating on a seasonal sales cycle or those affected by supply chain issues, ecommerce stock finance can help to relieve the pressures of maintaining stock availability and ensure your customers remain happy in a highly competitive space.

Invoice finance

If you are struggling to get invoices paid on time then you are not alone. Around 30 per cent of small businesses cite cash flow as a problem, and 26 per cent have been unable to pay their own suppliers on time. While selling online means you will receive payment via a third-party payment provider; you may also operate another side to your business that involves sending and receiving invoices. This is where invoice finance can step in and help you to bridge the gap, using the unpaid invoice as security for the funding. This is another short term solution and funds can be released within as little as 24 hours.

Merchant cash advance

You will likely take payments via credit or debit card for your Shopify business. Merchant cash advance allows you to secure funding that is repayable via a small percentage of each credit card transaction. This is a great solution if you find cash flow to be an issue and are worried about repaying large payments. 

Growth capital funding

With growth capital funding, you may be able to access a large pot of money for the specific purchase of growing your business. You typically don't need to sacrifice equity or lose control of business assets, as this works more like an unsecured loan based on your business performance.

To find out if you qualify for any of these Shopify finance products from our wide range of lenders, get in touch with Rangewell directly.

About Shopify Capital

If you have an established Shopify store, then you might have been invited to apply for the platform's own finance product: Shopify Capital. The company offers merchant cash advances and business loans with no interest. You have to repay a flat fee by remitting a fixed percentage of your daily sales to Spotify. Meaning the amount you repay depends on how much you sell each day. 

This might be a good option for you if you operate solely on Shopify, but there are some factors to consider before applying for Shopify Capital:

It is only available to selected retailers: You cannot apply for Shopify Capital unless you have received the notification that you qualify in your account. If you are new to Shopify and/or don't meet the minimum requirements, then you simply won't be invited to apply. Even if you do qualify, you do still have to submit an application before you can secure approval.

It only takes into account your Shopify performance: If you sell across other platforms then this might not be the best solution for you as Shopify Capital is calculated based on their data, and they do not take into account any sales made elsewhere. 

Funds may take several days to land in your account: You have to complete the application and then wait for approval. Even then, it may take a few days for Shopify to release the funds, so if you need short term cash, then this might not work for you.

It is calculated based on your current business performance - not your future plans or projections: The amount Shopify provides will only ever reflect your past performance (and the data they hold on that), and not your future growth plans. So, if you need a large sum to invest in a new arm of your business or to buy a significant amount of stock, you are better off searching the whole of market for financing options that better meet your needs.

Shopify finance from Rangewell

When it comes to securing funding for an ecommerce business, there are a lot of factors to consider. Since the industry is fast-moving and heavily reliant on technology, you might find that traditional lenders are yet to catch up and offer the best finance terms for businesses that operate primarily online.

A successful Shopify store can be a highly profitable venture, but high competitiveness means you need consistent cash flow to negate any delays that may affect your business operations. Your outgoings may include staff wages, warehousing, fulfilment, domain and hosting charges, among other costs. This is where Rangewell can help.

We are independent brokers with access to the whole of market, including a number of specialist ecommerce lenders who understand your business can provide the right finance to take your Shopify store to new heights.

At Rangewell, we don't just help you find finance - we support you with the application process, including working with you to identify any risks or concerns that may affect the finance you are offered. We have existing relationships with the lenders, and we understand how they work, making our knowledge and insight invaluable in the application process.

Whether you are just setting out in ecommerce, or an established Shopify trader ready to make the most of the potential your business has started to display, we can find the lenders who will work with you to provide the funds you need.

Ready to apply for Shopify finance or simply want to find out more? Get in touch with Rangewell today.