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Ecommerce Financing Guide: How to Scale Your Operations

Written by Banks Editorial Team
6 min. read
Written by Banks Editorial Team
6 min. read

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The eCommerce industry continues to thrive with technological advances. Some sellers have experienced exponential growth by capitalizing on opportunities. Others operate in sectors with potential for expansion but need capital to bring those visions of growth to fruition. 

If you run an eCommerce business and fit into the latter category, this guide will help you identify options to access the funds you need. Plus, you’ll discover ways to scale operations with eCommerce financing.

Find The Best Loan For Your Small Business

Get funding in as little as 24 hours. See your prequalified offers by filling out a quick online form. No industry excluded. SBA financing is available.

What is Ecommerce Financing?

Ecommerce financing is a form of business lending catering to web-based sellers or merchants. Funding is offered through banks, credit unions, online lenders and investors. 

How Does Ecommerce Financing Work?

It depends on the funding solution you choose for your company. However, most let you access funds for business-related expenses and repay what you borrow over time. 

The most common forms of Ecommerce financing are revenue-based financing, bank loans, working capital loans, term loans, lines of credit, merchant cash advances and invoice factoring. 

More on how each of these works, along with their unique benefits and drawbacks shortly. 

How to Scale Your Operations with Ecommerce Financing

You can use Ecommerce financing to ramp up your business in several ways.

Hiring More Team Members

It can be challenging to expand your company without hiring additional staff. You’ll generally need to increase your payroll budget and invest in training for the new hires for the move to be effective and generate a positive return on investment in the shortest time possible. Both require resources, making Ecommerce financing a viable option. 

Purchase Inventory

Working capital is needed to purchase inventory and ensure it remains at a level appropriate for your sales volume. But if outstanding receivables are an ongoing issue, the likelihood of running low on cash to cover inventory purchases is relatively high. Fortunately, Ecommerce financing provides a solution to delayed receivables by supplying the money you need to avoid carrying dangerously low levels of inventory or, even worse, running out of products to sell. 

Expand Product Line

Unless you already have the prototype(s) lined up and are ready to move forward with production, you’ll likely need to invest in research and development to expand your product line. Once that phase is complete, you’ll move on to production, which includes packaging-related costs. Again, you can use a form of Ecommerce financing to soften the blow to your company’s finances as you work to expand your company’s offerings. 

Entering New Market 

If you plan to expand your business by also operating offline, you’ll likely incur hefty expenses. Whether it’s by acquiring a new business or opening up a brick-and-mortar location, you’ll need capital to make it happen. Select forms of Ecommerce financing could lend a helping hand. 

Increase Marketing and Advertising 

Scaling operations may also involve garnering more exposure for your company. Word of mouth is the most effective form of advertising, and it happens to be free. However, that doesn’t mean you won’t benefit from investing in other forms of marketing and advertising. An online advertising campaign could be more than your company can currently afford, prompting the need for additional resources you can possibly access through Ecommerce financing. 

Improve Website/App

An outdated website is a surefire way to repel potential customers, especially if you operate in the Ecommerce space. So, it’s vital to invest in improving your online presence. Beyond website improvements or a complete overhaul, you may also find it necessary to invest in a mobile app to streamline the online shopping experience for your current and future customers. 

What are Your Options for Ecommerce Financing?

An assortment of Ecommerce financing solutions is available to companies of all sizes with varying financing backgrounds. 

Revenue-based Financing

As the name suggests, revenue-based financing is based on your sales volume. So, a less-than-perfect credit score doesn’t automatically mean you’ll be denied funding. In fact, lenders generally won’t check your personal credit or your company’s credit rating. 

Once funds are disbursed, repayment is determined by incoming revenue. There’s also a flat-fee revenue-based financing option that requires a fixed monthly payment over a set period – typically up to five years. 


  • Accessible by credit-challenged business owners 
  • Loan payments determined by revenues
  • Streamlined application process 
  • Little to no paperwork is required 
  • No spending restrictions 


  • Flat-rate funding option could cause cash-flow problems
  • Companies with low revenue volume could be ineligible 
Find The Best Loan For Your Small Business

Get funding in as little as 24 hours. See your prequalified offers by filling out a quick online form. No industry excluded. SBA financing is available.

Bank Loans

Banks generally come with stringent time in business, credit score and annual income requirements. You’ll also typically be required to provide business and financial documentation to the lender before a decision can be made. That said, if you run an established Ecommerce business, the financing terms you receive could be far more attractive than other forms of small business funding. If approved, you’ll receive the loan proceeds in a lump sum and make fixed monthly payments over an extended period (assuming the interest rate is fixed). 


  • More competitive interest rates than other business funding sources
  • Choose from an assortment of options from traditional banks, credit unions and online lenders
  • Secured bank loans let you access a higher loan amount


  • Lengthy application process and extensive documentation requirements
  • Generally unavailable to borrowers with bad credit 
  • Slow funding times (with some traditional banks)

Working Capital Loans

Working capital loans are designed to help small business owners cover everyday operational expenses. Most are short-term loans, generally payable in up to one year. So, they shouldn’t be used for major purchases or investments you’ll have trouble paying for in a brief period. You can also expect higher interest rates than you’d get with a traditional bank loan. 


  • No collateral is required to secure a loan
  • Minimal paperwork is required for approval 
  • Accessible to credit-challenged borrowers through online lenders 


  • Short repayment period 
  • Monthly payments could be costly
  • Higher interest rates 

Term Loans

Business term loans are most suitable for business expansion efforts or investment opportunities. They usually come in larger amounts than working capital loans, and you’ll get a loan term that spans several years instead of one. That said, expect to jump through more hoops and provide several documents to get approved. Furthermore, you’ll likely pay more in interest since the lender has more time to collect interest from you. However, the upside is a stellar credit rating can make you eligible for a competitive interest rate, assuming you meet the lender’s annual revenue and time in business requirements


  • Affordable monthly payments that work for your company’s budget
  • Extended loan terms to give you more time to pay 
  • Attractive interest rates to help keep borrowing costs low


  • Reserved for borrowers with good or excellent credit 
  • Steep borrowing costs due to a longer loan term
  • Extensive documentation requirements 

Lines of Credit

A business line of credit is a relatively flexible funding solution. You can borrow from a pool of funds as needed (up to the credit limit) and only pay interest on the amount you withdraw. Plus, you can re-use the funds repeatedly as you pay down the principal balance. However, withdrawals are only permitted during the draw period, generally up to three years long. Once the draw period ends, the line of credit closes, and you can no longer pull funds. Instead, the remaining balance owed is converted into a business loan, payable over a set period. Or the lender may offer to renew the line if you’ve managed it responsibly. 


  • Control borrowing costs by only paying interest on what you borrow
  • Attractive interest rates compared to business credit cards, merchant cash advances and invoice factoring 
  • Line of credit increases possible with responsible use over time 


  • Typically limited to established business owners with at least one to two years in business 
  • Variable interest rate means monthly payments could fluctuate drastically 

Merchant Cash Advance 

You can get an advance on future debit and credit card transactions with this form of financing. The amount you borrow is distributed upfront and payable through daily or weekly deductions from your card transactions. Merchant cash advances are generally easy to qualify for – most lenders request three months of recent statements to determine if you’re approved for funding. Furthermore, applicants typically receive rapid lending decisions, and funds are often dispersed in just a few days. Finally, most lenders don’t impose spending restrictions, so you’re free to use the funds however you see fit. 


  • Perfect credit is not required to access funds 
  • Minimum documentation requirements to help streamline the lending process
  • Fast approvals and funding to get you access to the cash you need sooner than later 


  • Hefty borrowing costs to access funds that could stretch your company’s reserves thin during the repayment period 
  • High risk of default if you experience a downturn in sales due to seasonal trends, inventory shortages or other negative factors 

Invoice Factoring 

It’s never fun to sit around waiting on customers to pay invoices while your company’s cash flow suffers. Fortunately, invoice factoring is one way to alleviate the pressure of running low on funds and having to make hard decisions, like choosing to pay contractors on time or purchase inventory to keep the cyber doors open. This form of funding involves selling unpaid invoices to a factoring company in exchange for up to 90 percent of its value. The factoring company handles collection activity and pays you the remaining amount you’re owed minus fees when your customer pays the balance. 


  • Get paid upfront instead of waiting several weeks or months to collect from customers
  • Avoid cash flow gaps and keep operations running smoothly 
  • Personal creditworthiness doesn’t determine approval 
  • Access a large amount of the invoice’s value – generally between 85 percent and 90 percent – in just days


  • Customers who aren’t creditworthy could prevent you from getting approved 
  • Factoring fees are steep compared to interest rates on business loans 
  • Hefty fees apply for invoices that remain unpaid after the preset turnover period

Where to get Financing for your Ecommerce Business

If you are looking for financing for your Ecommerce business, approaching an online lender especially designed for small businesses may be a good idea. Since 2007, the lending platform Biz2Credit has provided accessible funding options to companies in various industries, including SBA loans, lines of credit, lump sum payments, and other types of loans.

With a streamlined loan application process, you can get your loan approved in only one business day and receive your loan proceeds within 72 hours after approval. To see if you qualify without affecting your credit score, visit the Biz2Credit website and fill out a simple form to contact a business lending specialist.

Find The Best Loan For Your Small Business

Get funding in as little as 24 hours. See your prequalified offers by filling out a quick online form. No industry excluded. SBA financing is available.

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