Written by Jodie Pride
20th February 2015 • 6 min read
Financing your business can be a difficult and stressful process, but there are a number of sources of finance for ecommerce retailers.
Borrowing from a bank is not necessarily a bad idea. If you’ve got a great business plan and can offer some sort of security, then getting a loan from a bank can be a good way of getting funding quicker than saving it yourself.
A great Alternative to a bank loan is to use a small business loan provider. These provide short term finance for retailers, which is usually paid off through a percentage of your earnings taken from each transaction.
- EZBob allows you to grow your business and offer business loans up to £120,000. You must be over 18; the director, owner or partner of a UK registered company; have a valid business debit card; and have a minimal annual turnover of £10,000 to qualify.
- Kabbage offers fast, flexible business credit from £1,000 to £40,000 and can deliver finance in as little as 7 minutes. Fees are 2% to 11% of your loan for the first month and 4% of the remaining 9 months.
- Liberis provides business cash advance of £2,500 to £300,000, which you pay back through card transactions, which means there’s no fixed monthly payments. They allow you to pay back less money in bad times and more in good times.
- United Kapital gives merchant cash advances to small and medium companies. It works in the same was as Liberis in that you pay off the debt through card transactions until the advance is paid off
- Boost Capital issues loans of up to £500,000. They have a simple application process and fast approval. You need a business that’s been running for 9 months to qualify, and you can use the capital for any business expense. They also offer a repayment plan customised to your cash flow model.
- Fleximize provides business loans up to £100,000 for small and medium businesses in the UK. You pay back a percentage of your monthly turnover until the amount due is paid back. By linking your payments to your revenue, Fleximize ensures that you’re never under pressure as you only pay when you get paid.
Use outside investors – selling shares in your company could attract business angels and venture capitalists. These can often provide shorter term finance for ecommerce, which could be the perfect solution for retailers looking for finance quickly.
Crowdfunding sites are a great way of achieving your financial goals quickly. However, this type of financing often means that your investors might want to have a say in how the businesses is managed.
UK based crowdfunding sites:
- Fundingcircle allows savers to lend money to small and medium sized businesses and aims to help businesses expand, investors prosper and the economy grow.
- Zopa peer-to-peer lending provides finance without going through traditional intermediaries such as banks.
- Seedrs helps you raise money through independent investors, starting at £10. You’re encouraged to share your progress with them through videos, photos, Q&A’s to harness their interest in helping your business grow.
- Crowdcube allows anyone to invest alongside professional investors in start-ups. It’s Europe’s largest network of angel investors with a community of over 115,000.
US based crowdfunding sites:
- Kickstarter: 5% fees, most well-known platform in the US and UK. Since it launched in 2009, they have helped raise a total of $649 million for 42,000 projects.
- Indiegogo: fees are 4% if your target is met, 9% if it’s not (plus payment processing fees).
- Rockethub: 4% fees, if you meet your target, 8% if you don’t (plus payment processing fees).
- Fundable: Costs $99 per month during active campaigns (plus payment processing fees). Lets startups to offer rewards or equity in exchange for funding. According to the site, startups that offer rewards typically raise up to $50,000, whereas startups that offer equity usually raise more.
- Crowdfunder: Fees are 5% if you meet your goals (plus payment processing fees).
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