You might be starting as an eCommerce company or might be an existing player in this lucrative market. Regardless, the beginning of the new year also brings new opportunities for growth in the year that lies ahead. Sadly, however, funding is limited, and often you might need to review your options if you want to go full steam ahead on those grand plans.

When it comes to funding for your business, most likely, the first thought to strike your mind would be to consider conventional term loans from banks. But for unenlightened eCommerce businesses have several additional funding options open to them, like inventory financing. Not all funding options are equally easy to tap into. They also vary in the amount of funding they might potentially provide you besides the time the whole process is likely to take. Your funding options and results will be determined by a few key facts about your business at the end of the day. They include business information and background, the required capital, and the intended use of this capital.

This article will get you adequately acquainted with four of the more popular funding options (other than conventional loans) open to you to start or expand your eCommerce business:


When we use the term “microloan,” we are talking about loans typically less than $50,000. The experts at Nav explain small businesses or eCommerce ventures who are just starting can use such loans. They can use the funds for buying equipment, office supplies, inventory, or to meet other miscellaneous expenses related to your business. Usually, microloans are meant to meet your short-term funding needs and their term periods are similarly short. Many financial institutions offer short-term loans that include credit-unions, banks, non-governmental financial institutions. There are several governmental microloan programs, as well. The term started to gain currency around 2009 when the Small Business Administration of the US government began a microloan program and increased its maximum ceiling from $35,000 to $50,000.

Small businesses that need funding of $50,000 or less will find the SBA microloans to be an attractive option they can use. Suppose your loan application gets approval from the appropriate authorities. In that case, there are only a handful of restrictions on how you may use these loans. eCommerce businesses are likely to find this great flexibility to be particularly suited for their purposes. To top it all, SBA microloans come with significantly low-interest rates.

But like any other type of means to finance your business, there are a few drawbacks to avail of SBA loans as well. If you are serious about taking an SBA loan, you need to approach the process very seriously. Ensure you are comprehensive about everything, be patient, and ensure that the credit score for both yourself and your business is reasonably good. The decision process is likely to extend to several days, if not weeks. If for any reason governmental functions are disrupted, this decision process will be to be prolonged further. If you need access to funds quickly for your eCommerce business, this is hardly the best option for you.

Credit Lines For Your Business

Credit lines work in a way that is quite akin to that of credit cards. In contrast to term loans, a line of credit doesn’t provide you with lump-sum amounts at one go, and you need not repay the sum in smaller monthly installments. No, that is not how business credit lines work. In the latter case, you are provided access to capital on an ongoing basis once you get approval from the financial institution providing you the facility. The balance can be carried forward from one month to another. The interest you are liable to pay is determined by the amount of credit you use. It also follows the credit agreement that both parties agreed to before the line of credit got approval. Once an amount you took as credit is returned, the money is made available to you once again to use, considering the credit limit.

Flexibility is one of the biggest virtues of a line of credit funding option. It makes it one of the most typical and most popular ways businesses meet their capital needs. Also akin to credit cards, business lines of credit offer great freedom in the type of business expense you can cover using the credit. You can use credit lines to meet almost every cost you might incur in your business’s day-to-day operations. Usually, the credit limit is the sole restriction.

A/R Factoring

A/R Factoring is an acronym for accounts receivable Factoring. It is a hugely popular funding option, especially amongst owners of eCommerce businesses. This financing type also has a variety of other terms that are used to refer to it, which include:

  • A/R Financing
  • Receivables factoring
  • Or in some cases, as only Factoring

The context of its use largely determines the use of the specific term. In this type of funding option, third party firms designated as factors buy a part of the receivables of your business for cash. The capital you get provided is a fraction of the number or amount of receivables you initially pledged. The exact fees charged by factoring companies depend a lot on the A/R financing agreement and the current situation. Usually, such firms will provide you with an advance payment of 50%-90% of the entire sum that the invoice amounts to. The remaining are kept reserved by these firms. Some firms will advance you cent percent of the invoice value, but that is rare, and in any case, it will in all likelihood come with additional fees.


The last funding option that deserves mention is crowdfunding. It is relatively new and is a product of our digital and online world, just like an eCommerce business. Crowdfunding enjoys excellent popularity amongst business owners, especially people trying to start or grow an eCommerce business. Owing to their popularity, a large number of crowdfunding platforms have emerged. Of these, Indiegogo and Kickstarter enjoy greater favor amongst both innovators or entrepreneurs or their intended buyers. Using crowdfunding, an eCommerce entrepreneur can quickly raise a substantial amount in the form of preorders for his product.

Crowdfunding comes with numerous benefits, too many and too deep to be mentioned in this article’s limited space. However, you will find plenty of online resources on the topic. Crowdfunding works and straightforwardly. Aspiring customers pledge specific sums of money to a business through a crowdfunding platform for a particular reward, usually some product. Often such platforms help companies in the promotion of their campaigns as well.

Like the rest of the world, business is moving online too. This shift in the center of human activity has opened up the doors of opportunity to many people. But irrespective of whether you have just started your business or want to expand an existing one, funding is indeed a cause for concern. And in this, the funding options mentioned in this article are the top ways to raise funds for most eCommerce businesses. Best of luck in your entrepreneurial journey forward!

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