When it comes to funding your e-commerce business, there are a few things to keep in mind. You need to be able to access the funds as quickly as possible. This is really important as any delay in funding could quite easily result in your business not performing as well as you need it to.
You also need to be able to apply for funding in an efficient and easy way. While the thought of having more funds at your disposal can seem like the perfect solution, if it means going through a long, drawn-out, and overly complicated process, the benefits can very quickly drop.
Before deciding on the best funding solution for your e-commerce business, it’s well worth taking some time to explore some of the many funding options out there.
When you take out a business loan, you will know, understand, and agree to the repayment terms. For example, your loan agreement could state that you will pay back $500 on a specific day every month for 60 months. This means that you know exactly when your loan will be repaid in full and when this business debt will no longer be a part of your business.
This type of funding needs to be carefully thought about and you need to be completely sure that your business will always be in a position to make the monthly payments to avoid any issues from coming up.
Business Credit Cards
For example, let’s say your business credit card has a credit limit of $5000. Obviously, you will have to pay interest on whatever money you borrow on the credit card so, if you maxed it out, you could end up paying back quite a bit more than the original $5000. However, with a business credit card, you might only need to use $2000 to buy extra inventory. This means that you will only be paying interest on the $2000 you have borrowed instead of the full amount of credit available to you and your business.
Business credit cards are more flexible than business loans so this could be a deciding factor as to whether they are the best funding solution for your e-commerce business.
Friends And Family Loan
You do need to be careful if using this method of funding as, not only can it cause personal problems between you, it can result in complicated legal implications if you don’t do things properly right from the start.
If your friends and family are willing to help fund your e-commerce business, it could be a fantastic way of getting a head start and it can go a long way in helping your business to be successful in the long term.
E-Commerce Specialized Growth Plans
Specialized growth plans that are offered by companies like 8fig can be some of the best funding solutions out there for your e-commerce business. With this type of plan, you will be able to secure the funding you need in such a way that suits an e-commerce business.
Venture Capital Financing
While this type of funding can be exactly what some business owners need, you do need to be careful that you work with the right venture capitalist. Choosing the wrong one can result in them having much more control over your business than you might have initially thought.