Financing for online retailers

With the increase in shopping via the internet in recent years, the market for online retail has grown quickly. Selling goods and merchandise through online stores is a profitable business model with a promising future.

Due to the nature of online retail, however, the need for a financing solution is all too common. Online retailers must pay a number of supply chain expenses from manufacturing costs to freight in order to keep their product in stock. These bills are usually due well before revenue comes in from sales, creating a cash flow crunch for online retailers.

Many online retailers therefore require financing in order to free up the working capital necessary to stay in stock while growing their businesses.

    8fig: Working Capital For Online Retailers

    Grow your online retail store 2.5x faster with an 8fig Growth Plan. 8fig funding is:
    Your 8fig Growth Plan is designed just for you. It’s uniquely suited to your business’s needs based on information you provide. You get the funding and resources you need to grow and reach your full potential.
    Cash Flow Friendly
    8fig financing is cash flow friendly. That means that your payments and remittance schedules are separate and tied to the ups and downs of your supply chain expenses to maximize your cash flow.
    Unlike most funding options which provide one lump-sum payment, 8fig offers continuous financing. You get repeated cash infusions when you need them most, so you can cover your supply chain expenses.
    With 8fig funding, everything is flexible. You can adjust your funding amount, cash injections, and remittance schedules in real time with the click of a button to fit the natural fluctuations of your business.

    About Financing for Online Retailers

    There are a wide variety of online retail stores, selling everything from clothing to food and drink items. They sell these goods on numerous eCommerce platforms including but not limited to Amazon, Shopify, and their own custom-made websites.

    Online retailers are responsible for a complex supply chain, which is made up of a number of stages, each accompanied by expenses. Online retail business owners need to make payments on raw materials and manufacturing, warehousing, freight, logistics, and more, often before they are even able to start selling a product. The gap in time between the due date for supply chain fees and the arrival of revenue from sales often creates a cash flow problem for retailers.

    When online sellers have more expenses due than revenue coming in, they wind up with negative cash flow. The lack of working capital resulting from this common situation makes it difficult for them to purchase more inventory and increases the chance of going out of stock. This challenge creates a need for specialized financing solutions uniquely suited to their needs.

    Financing Opportunities for Online Retailers

    financing for online retailers

    There are a number of financing opportunities available to online retailers, but it’s important for business owners to do their own research to find the solution that works best for their needs. In addition, an online retailer might not be eligible for all types of financing.

    It’s wise to gain an understanding of the various funding options that may be available to online retailers before accepting an offer. This can help online retailers avoid falling into debt or entering arrangements that may not be beneficial to their business growth.

    Bank loan

    A bank loan is perhaps the most well known type of financing available. In order to acquire a bank loan, an individual or business must apply for a sum of money from a bank. In certain cases, the bank may also request collateral, or a personal guarantee, to be collected from the borrower in the case that the loan can not be repaid. If the bank approves the loan request, the parties then agree on a repayment schedule complete with interest.

    Since banks are a traditional financial institution, they are often not familiar with online retail and eCommerce models. They may not have enough confidence in the business’s financial history to agree to a loan. What’s more, bank loans tend to be limited to smaller sums of money, which may not be enough to cover online retailers’ needs.

    The advantages of a bank loan include:

    • Lower interest rates than other forms of financing
    • Flexibility in how the funds are spent
    • Clear terms and repayment schedules

    The disadvantages of a bank loan include:

    • Long application process and turnaround time
    • Requires a credit check and often requires collateral or personal guarantee
    • Difficult to secure large amounts of capital

    Line of credit

    Lines of credit are another popular financing solution that may be available to online retailers. A line of credit is a borrowing limit that is set by a financial institution, most often a bank. The borrower can withdraw funds as they need until they reach the preset credit limit.

    Like a bank loan, getting approved for a line of credit requires applying through a traditional financial institution. If the line of credit is approved, the institution will also set the credit limit, or maximum amount that can be borrowed at a given time, as well as the interest rate and repayment terms. One of the biggest benefits of a line of credit is that the borrower only pays interest on the amount of money they withdraw, rather than the total amount of funding available.

    The advantages of a bank loan include:

    • Lower interest rates than other forms of financing
    • Only pay interest on credit used
    • Flexibility in how the funds are spent

    The disadvantages of a bank loan include:

    • Difficult to acquire without enough trading history
    • Low credit limits
    • Difficult to increase credit limits without big turnover


    When a large number of people each give a small amount of capital to a business or individual, it’s known as crowdfunding. Social media and various crowdfunding sites such as Kickstarter, GoFundMe, and Indiegogo give people outlets to present their ideas and request funding.

    One of the benefits of using crowdfunding to fund your business is that you don’t have to pay the money back or give away equity, as you do with most other types of funding. Instead, investors are awarded with small gifts or incentives. However, it can take a lot of time and resources to create a crowdfunding campaign, and there’s no guarantee that you’ll get the funding you need for your business.

    The advantages of crowdfunding include:

    • You don’t have to repay the funds
    • No credit checks and no collateral required
    • If your project succeeds you can get funded quickly while raising awareness

    The disadvantages of crowdfunding include:

    • Takes time and effort to create a campaign
    • Campaigns are not guaranteed to succeed
    • Heavy reliance on networking and strength of a new idea

    Equity financing

    Another common way for online retailers to raise capital for their businesses is through equity financing. There are several different types of equity financing including angel investors and venture capitalists. Angel investors are individuals who choose to invest their own money into businesses of their choosing in exchange for shares in the company. Venture capitalists invest significant amounts of money in businesses as well, but their funds come from a risk capital company.

    Unlike debt financing such as bank loans and lines of credit, the funding received is exchanged for equity, or shares, in the company, and often a share of profits as well.

    The advantages of equity financing include:

    • You don’t have to repay the funds
    • Large sums of money are available
    • You get access to knowledge and expertise as well as a larger network of connections

    The disadvantages of equity financing include:

    • Can be difficult to acquire
    • You must give up equity in your company
    • You surrender control and decision-making power as well as a portion of profits


    Grants are another way that online retailers can secure financing without having to worry about paying it back. However, grants can be difficult to acquire. The most common type of grants are government-backed grants, although other institutions might also offer grants to online retailers depending on their business model.

    The first step in acquiring a business grant is research. Seek out grants that are relevant to your business or you as an entrepreneur. Grant applications vary in terms of length and detail, too. Grants tend to be quite competitive, so you might need to apply for many different options in order to actually receive one.

    The advantages of grants include:

    • You don’t have to repay the funds
    • Opportunities available for minority business owners
    • You don’t have to give up equity or profits

    The disadvantages of grants include:

    • Heavy competition; they can be difficult to acquire
    • Application can be long and time consuming
    • Not relevant for every business or entrepreneur

    Revenue-based financing

    Revenue-based financing has become a popular option for online retailers in recent years. It is another type of debt-financing, like a bank loan or line of credit, in which a borrower must repay the lender for the funds they receive, along with an extra fee. Instead of an interest rate, however, revenue-based financing comes with a cost of capital. This is typically expressed as a percentage, and is the fixed amount that the borrower must pay back on top of the value of the loan.

    Repayments for revenue-based financing are also unique. There is no set monthly repayment schedule or amount, rather revenue-based financing is repaid as a percentage of future sales. This is typically calculated on a monthly basis.

    The advantages of revenue-based financing include:

    • Quick and simple application process
    • It’s equity-free and there is no credit check or personal guarantee required
    • Repayment process based on sales revenue

    The disadvantages of revenue-based financing include:

    • Amount of funding depends on the performance of your business
    • More expensive than other types of financing
    • Businesses with little or no revenue are not eligible

    Merchant cash advance

    A merchant cash advance, also known as an MCA, is similar to revenue-based financing in that it is repaid as a portion of future sales. The main difference is that you pay back merchant cash advances as a percentage of each credit card transaction. Every time a customer makes a credit card payment, a percentage of the sale goes toward repaying the MCA.

    Like revenue-based financing, this type of funding comes with a cost of capital. It tends to cost between 6% – 12% of the amount of capital borrowed depending on the risk incurred along with other factors.

    The advantages of a merchant cash advance include:

    • Quick and simple application process
    • It’s equity-free and there is no credit check or personal guarantee required
    • Repayments are made as a percentage of credit card sales

    The disadvantages of a merchant cash advance include:

    • Amount of funding depends on the performance of your business
    • More expensive than other types of financing
    • Businesses with little or no revenue are not eligible

    Invoice factoring

    One of the problems faced by many online retailers is a delay between making a sale and receiving the revenue in your bank account. Invoice factoring is a financing solution that gets cash to sellers faster.

    Businesses can sell their invoices to a factoring company, which quickly gives them up to 90% of the value of the invoice. Instead of waiting for the third party platform to release the funds, the business gets them almost immediately and can start using that cash as needed. Then, the factoring company is responsible for collecting payment on the invoice. Once the full amount is received, the factorer will pay the business the difference, minus a fee for their service.

    The advantages of invoice factoring include:

    • Less risky than other forms of financing
    • Fast access to working capital
    • Repayments are made as a percentage of credit card sales

    The disadvantages of invoice factoring include:

    • High fees lower the profit you receive
    • If the platform doesn’t pay an invoice it’s still your responsibility
    • Only helpful to businesses with delayed invoice payments

    8fig Financing for Online Retailers

    Another option for financing for online retailers is 8fig. Unlike other financing methods mentioned above, 8fig is more than just a funding solution – we’re a growth partner. 8fig is designed to provide online retail businesses with the tools you need to make better growth decisions while simultaneously offering flexible, continuous capital. 8fig’s funding plans are tailored to your business’s individual needs, ensuring cash flow stability and maximum growth potential.

    Why use 8fig financing for online retailers

    There are many advantages to choosing 8fig financing. We offer a unique solution designed to encourage the growth and success of eCommerce businesses.

    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 for online retailers

    The 8fig platform is designed and built to assist business owners with the various processes that make up your business, from supply chain mapping to cash flow management to sales analytics and forecasting. All of this is done with a focus on helping sellers achieve aggressive growth, creating an alignment of interests, unlike other funding companies for which funding is a zero-sum game.

    Who is Eligible for 8fig Online Retail Financing

    In order to be eligible for online retail financing from 8fig, there are minimal requirements. You must sell a product online, have at least a year of trading history on your platform of choice, and have made $100,000 in revenue over the past year, with an average of $8,000 in sales per month during the last 3 months.

    8fig does not require a credit check, and we never take any equity in your business. Our decisions are based solely on business performance.

    If you meet these requirements, chances are 8fig will be happy to provide you with continuous, flexible funding for up to 90% of your supply chain costs.

    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!

    The funding you need, when you need it.

    Get funded