E-Commerce Loans

What is E-Commerce Lending?

Ecommerce financing is a type of funding specifically designed for online businesses that need to quickly access capital.
Unlike traditional business loans, ecommerce financing does not require a personal guarantee, does not impact the business’s credit score, and there is no interest charged.
Instead, the investment is made at a fixed price, and the lender receives a percentage of the business’s future revenue until the investment is repaid.
This type of funding is typically based on a revenue-sharing agreement, which means that the lender takes a slice of the business’s future sales in exchange for providing the capital needed.
Ecommerce financing is a flexible solution that can adjust to the growth of the business, and it allows the business to retain 100% equity.
If you’re an ecommerce business, whether you sell directly from your website or through a marketplace platform, you can typically apply for ecommerce financing.

The Benefits of an E-commerce Loan

There are several advantages to obtaining an ecommerce loan, including:

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Quick access to capital:

Ecommerce loans can provide fast access to funding, allowing businesses to respond quickly to opportunities or unexpected expenses.

Higher approval rates

No personal guarantee:

Ecommerce loans typically do not require a personal guarantee, meaning that the business owner's personal assets are not at risk if the business is unable to repay the loan.

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No impact on credit score:

Ecommerce loans are usually not reported to credit bureaus, which means that obtaining this type of funding is unlikely to impact the business's credit score.

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Revenue-based repayments:

Repayments on ecommerce loans are based on a percentage of revenue, which means that businesses only need to make payments when they are generating revenue.

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Flexible repayment terms:

Ecommerce loans typically have flexible repayment terms that can adjust to the business's revenue growth, allowing for more manageable payments during slower periods and faster repayment during prosperous times.

Does my business qualify for asset finance?

Retain equity:

Ecommerce loans do not require businesses to give up equity in exchange for funding, which means that the business owner can maintain control of their company.

Apply for E-commerce funding

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How does it work?

Fill in our form​

A member of the team will be in touch to collect some basic information. This helps us understand the type of funding that would best suit your business.

We find the best funding for you

We use the information you provided to source the best funding options for you and your business using our panel of over 250 lenders.

We present your options

We’ll then present you will all of the funding options available to you and give you time to decide which one you would like to proceed with.

Who Can Apply for an E-Commerce Loan?

Ecommerce loans are typically available to online businesses that generate revenue through ecommerce sales channels. These businesses can include online retailers, drop-shipping businesses, software-as-a-service (SaaS) companies, and any other businesses that sell products or services through online platforms. However, eligibility criteria may vary between lenders, and some may have specific requirements for the type of business that can apply. Generally, businesses that have been operating for a certain amount of time, have a proven track record of revenue, and are based in a qualifying country may be eligible to apply for ecommerce financing.

Is franchising a good fit for my business?

Do you qualify for an ecommerce business loan?

Are you wondering if your ecommerce business is eligible? While each lender has their own criteria, generally there are four requirements:

  1. Your ecommerce business is registered in the UK.
  2. 6 months of trading.
  3. You are over 18 years of age.
  4. Monthly revenue of a minimum of £5,000

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How to check your eligibility for a ecommerce business loan:

To check your eligibility for an ecommerce business loan, you should start by reviewing the lender’s criteria for the loan. Some common requirements include being a registered business, having a certain amount of time in business, meeting minimum revenue thresholds, and having a good credit score. Once you have an understanding of the lender’s requirements, you can evaluate whether your ecommerce business meets the criteria. Some lenders may have pre-qualification tools that allow you to check your eligibility without affecting your credit score. You can also consider working with a loan broker or comparison service, like Smart Funding Solutions, to help you identify lenders that are a good fit for your business and have favourable loan terms. These services may also be able to help you check your eligibility before you apply.

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Ecommerce business loans differ from other types of business loans in several ways:

  1. Eligibility requirements: Ecommerce loans are designed specifically for online businesses that generate revenue through ecommerce sales channels. Other types of loans may have different eligibility requirements based on the industry or type of business.
  2. Repayment terms: Ecommerce loans typically have repayment terms based on a percentage of revenue, whereas other types of loans may have fixed or variable interest rates with monthly or quarterly payments.
  3. Funding amounts: Ecommerce loans may have lower funding amounts compared to other types of loans, as they are designed to provide quick access to smaller amounts of capital.
  1. Costs: Ecommerce loans can be more expensive than traditional loans because they often have higher fees or a larger percentage of revenue is taken as repayment.
  2. Collateral requirements: Ecommerce loans may not require collateral or a personal guarantee, whereas other types of loans may require collateral to secure the loan.
  3. Use of funds: Ecommerce loans can be used for a variety of business purposes, but they are often used for inventory purchases, marketing campaigns, or website improvements. Other types of loans may have more restrictions on the use of funds.

Other Loans for E-Commerce Businesses

Why Choose Smart Funding Solutions?

Using a broker can save you time, provide you with expert advice, and potentially secure you better loan terms and interest rates.

Using a broker for your ecommerce business loan can have several advantages:

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Access to multiple lenders:

Brokers work with multiple lenders and have access to a wider range of loan options. This means you have a better chance of finding a loan that suits your business needs.

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Time-saving:

Instead of spending time researching and applying to multiple lenders individually, a broker can do the legwork for you. They can quickly compare loan options and present you with the most suitable offers.

How does it work?

Expert advice:

Brokers have in-depth knowledge of the lending market and can offer expert advice on which loan options are best for your business. They can help you navigate the lending process and answer any questions you may have.

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Better negotiation:

Brokers can negotiate on your behalf to get the best loan terms and interest rates. They have established relationships with lenders and can use their leverage to secure better deals for their clients.

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No upfront fees:

Most brokers do not charge upfront fees for their services. Instead, they receive a commission from the lender if you choose to accept a loan offer through them.

Can I apply if I have bad credit?

Businesses with a range of credit histories may still be eligible for financing. Even if you’ve previously had difficulties making all of your payments on time, finding out if you qualify for a loan is straightforward.

It could be challenging to obtain regular financing if your credit is poor. There are, however, a variety of financing solutions accessible, so you can still acquire the funding you require to expand your business. Even with a poor credit history, your company can still benefit from the alternative finance lenders we have available.

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Frequently Asked Questions

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E-commerce loans are specialised financial solutions devised to assist businesses operating online. These loans can address various needs such as inventory management, website development, digital marketing efforts, technology enhancements, and other operational expenses.

E-commerce loans are suitable for owners and operators of online businesses, whether a start-up or an established entity. This covers both service-based and product-based online enterprises.

Funds from an E-commerce loan can cover a comprehensive range of business needs, such as purchasing inventory, investing in technology or website upgrades, digital marketing and advertising efforts, seasonal stock build-up, or managing everyday business operating expenses.

There are various types of E-commerce loans on offer, including working capital loans, term loans, lines of credit, and merchant cash advances. Your choice depends on your specific business needs and financial situation.

Before applying, consider your business’s unique financing needs, your ability to repay the loan, the anticipated returns on your investment, and the cost-effectiveness of the loan option you select. Also, a solid credit history and a robust business plan may improve your chances of approval.

The application generally involves approaching a lender with a robust business plan and relevant business documentation. The lender could be a traditional bank, an alternative lender, or an online financial service provider. Documents often needed include financial statements, business registration details, and bank transaction records.

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Interest rates can differ depending on the lender, the loan product, the term of the loan, your credit history, and the overall health of your business. Always compare different loan offers to secure the most favourable rates.

The need for collateral depends on the loan type and the lender’s policy. While secured loans will need collateral, unsecured loans generally do not. However, unsecured loans may have stricter eligibility criteria and higher interest rates.

Acquiring an E-commerce loan with bad credit can be challenging, yet not impossible. Some lenders focus more on the potential and performance of your online business rather than purely on your credit history.

Yes, the UK government provides several loan programmes designed to support small and medium businesses, including the British Business Bank’s Start-Up Loans scheme. Businesses should check the relevant government websites for the most accurate and up-to-date information.

The speed at which you can access funding will depend on your lender. While traditional banks might take weeks to process a loan, many online lenders pride themselves on their swift approval and disbursement timings, often within a few days.

Whether or not there are penalties for early repayment will be stipulated in your loan agreement. Some lenders may charge an early repayment penalty, while others may not. Always ensure you understand the terms and conditions before entering into the agreement.

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