About Electronics Business Financing
Every electronics business has a different budget and unique goals. These variations mean that electronics business financing is not a one-size-fits-all solution. Therefore, before selecting a funding option for your business, it’s wise to first determine your budget and needs. It’ll take some shopping around, as one lender may be happy to work with you, while another may have requirements you don’t quite meet, such as a credit score limit.
Consider your supply chain costs, available assets, current finances, and the monthly loan amount that you can comfortably pay. Decide if you’re willing to give up equity in your business or if you need a flexible repayment schedule to comfortably repay your financing.
In addition, it’s wise to optimize your budget before applying for external financing. Always try to reduce the supply chain costs by negotiating with suppliers for discounts via bulk orders or a long-term contract. Once you’ve set your budget, you can approach banks, lenders, and investors with these variables in mind. It will make it that much easier to determine who is a good fit for your needs.
Financing Opportunities for Electronics Businesses
Applying for funding can be stressful. There are many banks and financing solutions to choose from, each one demanding different eligibility requirements. Take your time and think about what your business needs before committing to one. The type of financing you acquire can make or break your business operations. So, consider your budget and the type of loan payment you can afford before signing on the dotted line. Here are some of the best types of electronics business financing to get you started.
Bank loan
Bank loans are great for those with a long business history and a good credit score. If you are approved, banks consider you low risk, so you’ll likely have a lower interest rate as well. The interest you pay on this loan is tax deductible, so you’ll be able to get some of that back during tax season. Many businesses try applying for loans from traditional banks first, due to the relatively high loan amounts and conditions.
This type of loan is difficult to obtain, due to the strict eligibility requirements. High credit scores, lengthy business history, and even collateral may be needed to secure a bank loan. Banks are not as familiar with eCommerce as more traditional businesses, so some sellers run into trouble. Startups don’t usually qualify either because banks prefer to work with businesses that have at least three years of trading history. The application and funding process is also slow compared to other loan types. If you manage to obtain this type of loan, make sure you can afford the large monthly payments.
Revolving line of credit
A revolving line of credit is beneficial for many businesses. It’s a good source for emergency funds and consistent cash flow for day-to-day expenses, such as marketing and inventory. More cash becomes available as you pay off the loan, similar to a credit card. It’s accessible 24/7, so you can control when you spend it and how you spend it. It also helps you build business credit, so you can obtain a better loan later down the line. The approval rate for a line of credit is high, too.
While this funding type has its perks, it also has some challenges. Since it’s easy to obtain, it’ll come with higher interest rates and extra fees. Depending on your lender, this will determine whether you can afford the monthly payments or not. Plus, the borrowing limit is on the lower side, regardless of business credit and history. It’s not the loan to go for if you need to make large purchases.
Crowdfunding
Some businesses may not be able to qualify with banks and other funding companies. Instead, they can turn to crowdfunding to help them boost their budget. This type of fundraising involves gathering many small investments from a number of people. Crowdfunding is a way to access quick cash while keeping total control of your business. In most cases, you don’t have to worry about paying them back, either.
Running a successful crowdfunding campaign is difficult. You’ll need a good, eye-catching idea and the gift of salesmanship in order to convince potential investors to give your project a shot. This takes a great deal of creativity, and even so, a large percentage of crowdfunding campaigns fail to reach their goals.
Equity financing
Investors are often a good option for electronics business financing, and they may be willing to provide you with the capital you need when banks and lenders won’t. You can sell shares of your business to family and friends, but the most common type of equity financing comes from angel investors and venture capitalists. These are individuals and firms who seek out promising businesses in which to invest in exchange for equity. It’s a great way to quickly access large sums of capital, and you won’t have to pay it back in fixed monthly installments as with other loans.
Despite the perks, equity financing dilutes your ownership. You’ll want to choose your investors wisely, as they now have sway over company decisions. In addition, you need to share the profits with them, which lowers your profit margin. If you don’t want to give away any ownership in your business, or a profit-share sounds intimidating, equity financing may not be for you.
Inventory financing
Electronics businesses require lots of inventory in order to bring in revenue. Inventory financing is funding specifically for your inventory that often uses your inventory as collateral. It’s a comparatively quick and easy process, as high credit scores and a long business history aren’t necessarily needed. You can plan those product launches with ease, knowing you can keep the right amount stocked in your warehouse.
Since your inventory is your collateral, the lender will likely perform regular evaluations. Inventory financing can be a big help, but you may not receive the full amount you need to pay for your stocked goods. Make sure you can afford the difference, as well as the fixed monthly payments that may be required before signing an agreement.
Revenue-based financing
If you have consistent revenue, then you can use it to your advantage with revenue-based financing. You can obtain funding from investors who you’ll repay with a percentage of your future sales. Complete ownership is retained, as you’re not selling shares in your company. Revenue-based financing can take a short or a long time to pay off, depending on your sales volume and the loan amount. The repayment process is flexible, and no credit checks are needed. It’s a great option for those who don’t qualify with banks and lenders.
If you choose to move forward with the revenue-based financing option, then you’ll have to be diligent in meeting consistent revenue goals, so you can repay the funds. In addition, revenue-based financing is often more expensive than other types of loans, since it’s considered a higher risk investment.
Merchant cash advance
Merchant cash advances are a great way to quickly secure funding. They have lenient eligibility requirements, as a credit score isn’t always considered during the approval process. Collateral isn’t required to secure the loan either. You’ll repay the loan with future debit and credit card sales, so you don’t have to worry about a large monthly payment.
If you’re trying to build business history, this type of loan won’t help you. You’ll need to take other steps to build your credit score in order to obtain a better one later on. Merchant cash advances are also more costly due to their lenient requirements, so you’ll need to determine if you can afford the cost of capital before signing on the dotted line. If you can’t, they retain the right to remove money from your account, regardless of sales volume.
8fig for Electronics Business Financing
Financing can be difficult to obtain with banks and other funding solutions. Their eligibility requirements are often strict, asking for high credit scores and a years-long business history. This can leave promising businesses without the assistance they need to grow. What’s more, the conditions offered by traditional lenders are not always a good fit for online businesses, as their needs are different than those of brick-and-mortar retailers. 8fig is an alternative funding option that is designed exclusively for eCommerce sellers. It can offer electronics businesses a financing solution to optimize their cash flow and grow their businesses.
Why use 8fig for electronics business financing
8fig is the ideal funding and growth solution for eCommerce sellers. For electronics businesses that sell their goods online, 8fig not only offers continuous and flexible funding, but provides you with the means to manage your cash flow, map out your supply chain, and analyze your sales KPIs. You can prepare for new product launches, get ahead with a new marketing campaign, and reach your growth goals with consistent funding at your fingertips. In addition, with 8fig you have the ability to change your Growth Plan with the click of a button. This is exceedingly helpful for businesses with seasonality or fluctuating sales.
How 8fig works
1. Apply
The application process is fast and easy. Answer some questions about your business and sales, and then provide basic information about your supply chain stages and expenses.
2. Connect your store and bank account
In order to provide you with an optimized Growth Plan, 8fig requires that you connect your store and bank account to the 8fig platform.
3. Get funded
With 8fig, you can get funded in just days. Since 8fig funding is continuous, you receive capital infusions into your business right when you need it.
4. Make adjustments
If something changes and you need to adjust your payments, remittance schedules, or even funding amount, you can always do so thanks to 8fig’s flexibility.
5. Grow your business
All that’s left to do is sell, sell, sell. With 8fig, businesses are able to scale 2.5x as fast.
What 8fig offers in addition to financing
8fig doesn’t just offer a great financing solution for eCommerce businesses; we supply you with tools and resources that can improve your operations, increase revenue, and predict future sales. You can rely on our growth platform during the rough patches and the profitable times. Plus, when something changes unexpectedly (and let’s face it, this is inevitable in the world of eCommerce) you can adjust your funding plan to fit your needs.
8fig sees you as a business partner, unlike some faceless banks. We want you to succeed, because when you win, we win. The platform is built to help you maximize your cash flow, plan out your supply chain, and stay on top of your sales analytics.
Who is eligible for 8fig electronics business financing
8fig’s application process is simple and efficient. If you sell a product online, have been in business for at least one year, make at least $100,000 in annual revenue, and have made an average of $8,000 in sales per month during the last 3 months, you’ll likely be eligible for funding from 8fig. You’ll also get approved within days versus weeks or months. Then, you can start growing.
How to apply for 8fig financing
It’s easy to apply for 8fig financing, and it only takes a few minutes. Simply answer the questions and follow the prompts and you’ll get funded in no time!