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How To Get Funding for E-commerce Business 

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Updated October 9, 2023​

6 min. read​

With the rapid growth of online shopping, it’s the perfect time for entrepreneurs to start their own online stores. But getting your virtual storefront is often easier said than done. You’ll need to identify the right niche, come up with a list of offerings, develop a marketing strategy and create a customer retention plan. Plus, you’ll need to identify ways to fund your new online business if you don’t have the cash to invest when starting out. 

This detailed guide provides strategies to execute all these steps successfully. Plus, it dives into the ins and outs of e-commerce business financing and strategies to help boost your approval odds. 

Get Fast Funding For Your Business
Access up to $2 Million with flexible revenue-based funding. Get funds in less than 24 hours with same-day approvals. Easy to qualify with no fixed repayments to fit your budget.

Unique Challenges of E-commerce Businesses

It’s common to face hurdles when starting an e-commerce business. Below are some common challenges you may encounter. 

Finding the Right Product and Niche

As an e-commerce business owner, you need to select the right products and niche to focus on. Researching and identifying customer demands, preferences, and competition in your chosen niche is equally important. By understanding the market, you’ll be able to offer a unique value proposition to your customers and differentiate your business from others in the industry. 

Sourcing and Logistics

Your e-commerce business’s success depends on sourcing products from reliable suppliers and managing logistics effectively. Building relationships with manufacturers and wholesalers, negotiating pricing and ensuring timely delivery can be demanding but are essential for your business’s growth. Streamlining inventory management and shipping processes will also help you maintain order fulfillment and keep customers happy.

Attracting Customers to Your Platform

Attracting customers to your e-commerce platform can be another major roadblock. You need to create an online presence by investing in SEO, social media marketing and online advertising. Engaging with your target audience through valuable content and leveraging email marketing can improve your visibility and help bring prospective customers to your platform.

Increasing Visits and Sales

Driving traffic to your e-commerce site isn’t enough; you must also convert those visitors into customers. To do so, focus on optimizing your website’s user experience, which could include clear product descriptions, easy navigation and a seamless checkout process. Offering promotions, deals and personalized shopping experiences can also help boost sales and improve customer satisfaction.

Customer Experience and Retention

Maintaining a high level of customer satisfaction and retention is essential for any e-commerce business. Providing exceptional customer service, addressing customer inquiries promptly, and implementing an effective return policy can help you create loyal customers. Additionally, collecting and analyzing customer feedback can be invaluable in making improvements and meeting your customers’ needs.

What Is E-commerce Financing?

E-commerce financing refers to the various funding options available for your online business to support its growth, manage cash flow and cover operational expenses. As an e-commerce entrepreneur, having access to working capital is crucial for the success of your business.

One way to secure e-commerce funding is through traditional loans, which are often difficult to obtain, especially for online businesses. However, Small Business Administration (SBA) loans guaranteed by the U.S. government are a viable option. Banks typically offer these loans and are geared toward supporting small businesses.

Another popular financing option for e-commerce businesses is a line of credit. Lines of credit provide you with flexible access to funds when you need them. This is particularly useful for managing the cyclical and unpredictable cash flow that is common in the e-commerce industry.

Are There Lenders Specializing in E-commerce Business Financing?

There are lenders specializing in e-commerce business financing. They understand the unique needs and challenges faced by e-commerce businesses and offer tailored solutions to help grow your online store.

Online lenders that offer e-commerce-specific funding options typically have a more streamlined application process than traditional banks. They can provide quick access to funds, which can be particularly valuable for scaling an e-commerce business in a competitive market. Plus, they usually consider aspects like your online sales volume, store performance, and credit score to determine the loan eligibility and terms.

Asset-based lending can be an excellent choice for e-commerce businesses with valuable assets, such as inventory or equipment. These loans use your business assets as collateral, allowing you to secure funding with lower interest rates.

Crowdfunding is another popular alternative for e-commerce businesses. By tapping into your customer base and community, you can raise capital to expand your product line, fund a marketing campaign, or develop new technologies. Many e-commerce businesses have successfully used crowdfunding platforms like Kickstarter and Indiegogo to raise funds for growth.

In addition to these options, Small Business Administration (SBA) loans can serve as a viable option for e-commerce businesses. SBA loans are government-backed and issued by approved banks, offering competitive interest rates and flexible repayment terms. However, the application process can be lengthy, and meeting the eligibility requirements might prove challenging.

If you need funding for your e-commerce business, consider Fundkite. They offer a revenue-based financing solution to assist business owners with difficulty getting approved for business funding elsewhere. They will assess your company’s overall financial health to make a lending decision, not just your credit scores like other lenders.

Founded in 2015, Fundkite has delivered over $980 million in business funding to over 90,000 small businesses across different industries, and it boasts great customer reviews on platforms like Trustpilot.

If you would like to learn more about working with Fundkite, fill out this simple form on the page, and someone from their team will contact you to inform you about the next steps.

Get Fast Funding For Your Business
Access up to $2 Million with flexible revenue-based funding. Get funds in less than 24 hours with same-day approvals. Easy to qualify with no fixed repayments to fit your budget.

How To Get Funding for E-commerce Business

A popular method to secure funding for your e-commerce business is through a merchant cash advance

Consider a Merchant Cash Advance

As an e-commerce business owner, a merchant cash advance (MCA) is one option to consider for funding. A merchant cash advance is a type of short-term financing that provides you with a lump sum of capital in exchange for a percentage of your future credit card sales. This financing option can be a good choice for businesses with unpredictable revenue or seasonal sales patterns.

You’ll need to demonstrate a consistent history of credit card sales to obtain a merchant cash advance. Lenders will evaluate your sales history to determine the advance amount and the percentage of your sales that will be dedicated to repaying the advance.

One of the key benefits of a merchant cash advance is that the approval process is typically faster than other types of financing, and funds can be deposited into your account within a few days. Additionally, there are no fixed monthly payments, which can be helpful for businesses with fluctuating revenue. However, it’s important to note that merchant cash advances often come with higher interest rates than other financing options, and the repayment terms can be shorter.

When considering a merchant cash advance, it’s important to carefully evaluate the terms and fees associated with the advance. Make sure you understand the percentage of your sales that will be dedicated to repaying the advance, as well as any additional fees or charges. It’s also important to consider whether a merchant cash advance is the best fit for your business’s financial needs and goals.

The Benefits and Drawbacks of Using a Merchant Cash Advance to Finance Your E-commerce Business

Here are some key advantages and drawbacks to keep in mind: 


  • Quick access to funds: Merchant cash advances are typically approved and funded faster than traditional loans, sometimes within just a few days.
  • No collateral required: Unlike many other types of funding, a merchant cash advance does not require you to put up any collateral, which makes it less risky for your business.
  • Flexible repayment terms: Since your repayments are based on a percentage of your sales, your payments will be lower during slower months, making it easier to manage your cash flow.


  • Higher interest rates: Merchant cash advances often come with higher interest rates compared to traditional loans, which may make it more expensive to finance your e-commerce business this way.
  • No early repayment benefits: Since the total amount owed is determined upfront, paying off the advance early will not reduce the total repayment amount.
  • Potential impact on cash flow: If your sales suddenly drop, the percentage repayment can significantly impact your business’s available cash, potentially affecting your ability to cover operating expenses.

Tips to Secure Funding for Your E-commerce Business

When you’re ready to apply for financing, develop a viable business plan along with financial projections to submit to the lender. It’s equally important to gather the documents they’ll need to consider you for a loan. 

Building a Solid Business Plan

A well-structured business plan is critical when seeking funding for your e-commerce business. Your business plan should clearly outline your objectives, market analysis, and the strategies you’ll implement to achieve your goals. This document will show potential investors and funding sources that you have a clear vision and have put thought into how you will reach success. Consider including information about your target audience, product offering, and marketing plan. A thorough business plan will not only help you to secure funding but also serve as a useful roadmap for your business’s growth.

Coming Up with a Detailed Financial Model

A detailed financial model is also essential for demonstrating your understanding of your e-commerce business’s finances. This model should analyze your expected cash flow, including projected revenues, costs, and profitability. 

It’s important to analyze various scenarios to show how your business will adapt to different situations, such as periods of high or low demand. Investors and funding sources like bank loans and angel investors will find this information particularly valuable when assessing your business’s potential.

Prepare Documents and Requirements Before Applying

Before applying for funding, it’s important to prepare all the necessary information and documents and meet any requirements set by your chosen funding source. This may include:

  • Credit score: Ensure you have a good personal and business credit score, as this will impact your eligibility for certain funding options.
  • Business registration: Make sure your e-commerce business is properly registered and complies with all relevant regulations.
  • Bank statements: Provide recent business bank statements to show the financial health of your business.
  • Collateral: Some funding options, like asset-based lending, may require you to provide collateral, such as inventory or equipment, as security.

Taking time to prepare these documents in advance will show potential funding sources that you are organized and serious about your e-commerce business. It will also increase the likelihood of receiving the funding you need to grow.

Get Fast Funding For Your Business
Access up to $2 Million with flexible revenue-based funding. Get funds in less than 24 hours with same-day approvals. Easy to qualify with no fixed repayments to fit your budget.

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