What are e-commerce loans?

What are e-commerce loans?

Are you an online seller? If you run a business on the net, you will know that a considerable amount of time is spent trying to optimise sale growth in an increasingly competitive market when so many companies are vying for the attention of online customers. One of the ways you may consider facilitating growth is through funding, such as through payday loans bad credit.  We also take a look at e-commerce loans and explore what they can do for your company.

E-commerce loans

e-commerce-loans

E-commerce loans can be used to help fund inventories.

  E-commerce loans are a form of external financing that can be used as a tool as an online seller to help the company expand if you are struggling to get money elsewhere. These loans can be particularly beneficial as an online seller if you are trying to:
  • Find ways to fund an inventory (the number of goods and products you have in stock at any one time) to move your shop to the next revenue level
  • To have an operating cash flow, which you may be having difficulties with
  • To help find ways to pay any outstanding money owed to contractors or suppliers (known as payables)
 

What are the benefits of e-commerce loans?

E-commerce loans are primarily beneficial for your company to tide you over in the short-term. It can help you in some of the following situations:
  • If you are struggling with a sufficient amount of initial net capital to allow your company to grow
  • To help with seasonalities. What we mean by this is that sales do not always follow a straight line for various reasons. For example, it could depend on the nature of your business (perhaps with a spike in sales at a particular time of year) or unforeseen circumstances that lead to a dip in sales. Whatever the reason, an e-commerce loan may be able to help you with revenue fluctuations
  • E-commerce loans provide you with a certain element of financial flexibility
  • Having access to an e-commerce loan may mean you can take advantage of inventory sales at a discounted rate that you may not otherwise have been able to finance at a certain time of the year (as a result of seasonalities)
 

Things to remember when taking out an e-commerce loan

 Whilst we have stated the potential benefits as an online seller of getting an e-commerce loan, there are certain things you should be aware of before taking out this type of loan. One of the most important things you need to do is check that the lender if FCA registered in order to protect you and your company from scammers. You can check the Financial Conduct Authority register online, which lists all authorised lenders as well as any that have been reported for malpractice. In addition, it should be noted that e-commerce loans cannot fix all financial problems that you may have as an online seller. For example, these loans should not be used to finance losses, as funding a low margin business with e-commerce loans is a particularly risky venture.  

Daniel is a loans expert based in London and has been working in the payday loans industry since 2010.