E-Commerce Financing
How It Works —
Firms will provide you with capital based on data from your modern digital marketing solutions. Companies pay a fixed percentage of ongoing revenues to pay back the financing amount. The payments increase and decrease based on business revenue. These payments continue until an agreed-upon amount is repaid.
Example —
You receive $5,000 in funding and agree to pay the financier 8% of your revenue until you pay back $6,000 in total.
You Might Be A Fit If —
- You drive most of your revenue by selling products online.
- You have consistent e-commerce revenue to support repayment.
Why You Would Use This —
Typically starting with a smaller amount of funding, financiers will provide you with more capital every couple of weeks or months based on how your sales perform.
You have proven the success of your digital marketing efforts is in need of capital to scale up revenue.
What TO WATCH OUT FOR —
Paying a fixed percentage of revenue in a rapidly growing company can translate to higher payments than other debt products.
The total repayment amount does not change based on your growth.
Some providers will require you to share revenue whether you have borrowed or not.
Only take this kind of funding if you intend to utilize the capital.
Many provide the funding on a credit card that can’t be used for general business expenses such as payroll.
The funding is only designed to invest in digital marketing to acquire new customers.
The revenue share amount may change depending on where you spend the capital.
Understand if the financier has preferred vendors that can help you keep the financing costs low.