Finimpact

Best E-Commerce Business Loans

While ecommerce businesses have fewer startup and ongoing costs than brick-and-mortar stores, many business owners may need financial assistance to start or grow an ecommerce website. An ecommerce business loan can help cover your costs, whether you’re just getting started or expanding.

Best E-Commerce Business Loans
Lindsay Frankel
Written by:Lindsay Frankel
Personal Finance Expert

Your costs will vary depending on whether you’re dropshipping, reselling, or manufacturing products from raw materials, and whether you’re hiring staff. But every ecommerce business needs to spend money on marketing, as well as operating costs such as legal fees and accounting. And existing ecommerce businesses often need funding to grow or expand. That’s why 37% of small businesses sought funding in 2020. Our experts reviewed and ranked the best ecommerce lenders for every type of small business need, so you can get the funding that’s best for you.

Our Top Picks for Best E-Commerce Business Loans

biz2credit review
  • Multiple loan types available
  • Funding in 48h
  • Soft credit pull
credit score
Min. Credit Score 600+
loan amount
Loan Amount $25K - $6M
loan repayment
Loan Repayment 12-36 months
forafinancial
  • Ideal for plenty of industries
  • Approval not solely credit based
  • Early payoff discounts
Credit Score
Min. Credit Score 550+
Loan Amount
Loan Amount $5K-$750K
Loan Repayment
Loan Repayment 4-15 months
fundera
  • Connections to multiple lenders
  • Competitive rates
  • Soft credit check
Credit Score
Min. Credit Score 550+
Loan Amount
Loan Amount $5K-$5M
Loan Repayment
Loan Repayment Up to 30 years

How to Choose the Best E-Commerce Business Loans

When comparing your options for funding, it’s important to consider the following factors, which our experts used to evaluate and rank ecommerce lenders.

  • Loan Features: Make sure the loan terms meet your needs and that the repayment schedule is feasible for you. Also pay attention to the amounts offered, and try not to borrow more than you need.
  • Application Process: Evaluate the ease of the application process and how long it will take to get funding for your e-commerce business. Check to see if you can prequalify or if the lender requires a hard credit check.
  • Interest Rates and Fees: Aim for the lowest APR and the fewest fees you can qualify for based on your creditworthiness.
  • Qualification Process: Look at the credit score requirements for your business and personal credit score and check the annual revenue and business history requirements to make sure you qualify before applying.
  • Online User Reviews: Check sites like Trustpilot for independent customer reviews of the lender you are considering, and make sure that the quality of their customer service meets your expectations.
  • Perks and Bonuses: Consider things like savings opportunities and payment flexibility. Some lenders have unique offerings in this area. If you prefer mobile payments, make sure the lender has the technology you need. And ensure the lender maintains an accurate, transparent website.

Best E-Commerce Business Loans for 2022

1. Biz2Credit — Best for Working Capital

Biz2Credit is a broker connecting you with lenders that offer ecommerce working capital funding and term loans that can be used for a variety of business needs. It’s best for businesses with at least six months of history that need more than $25,000 in working capital.

Pros
Quick and easy online application
Extended customer support hours
Fast funding within 72 hours
Flexible repayment schedule
High borrowing limits up to $2 million
Excellent independent customer service reviews
Cons
$250 to $400 closing fee
Not available to new businesses
Difficult to know rates before applying

With Biz2Credit, you can borrow anywhere from $25,000 to $2 million in working capital funding or up to a $500,000 term loan. Term loans have a 12 to 36 month term with simple interest starting at 7.99% plus an origination fee, while working capital loan terms and rates vary by lender. You can repay daily, weekly, or bi-weekly. Most customers who are approved for working capital have at least six months of business history, annual revenue above $250,000, and a minimum 575 credit score. Most customers who are approved for a term loan have at least 18 months in business and a minimum 660 credit score.

The Bottom Line

With a short turnaround for funding and high borrowing limits, Biz2Credit makes it easy to get the funding you need quickly. The broker is best for existing businesses that need a lot of working capital to expand.

Try Biz2Credit

2. Fora Financial — Best for Small Loans

If you’re looking to borrow a small amount for a short time, Fora Financial offers small business loans and merchant cash advances starting at $5,000. The fintech lender can approve your application within 24 hours and you can receive the funds within 72 hours. You can get a free quote to see what you qualify for. And with an early payoff discount, Fora Financial is ideal for ecommerce business owners who can quickly recoup their costs in revenue.

Pros
Quick and easy online application
Prequalify without hurting your credit
Fast funding within 72 hours
Friendly to poor credit borrowers
Early payoff discount on small business loans
No usage restrictions
Cons
Longest term is 15 months on small business loans
Requirements for business age and sales
Origination fee

You can borrow between $5,000 and $750,000 from Fora Financial, either as a loan with a set term of four to 15 months, or as a merchant cash advance, which is a more expensive form of financing in which you repay a percentage of your revenue. These unsecured loans can be used for any purpose. Fora Financial uses factor rates ranging from 1.1 to 1.3 — be sure to to use the factor rate to determine the total cost of borrowing when comparing Fora to other lenders. You can get a free quote without hurting your credit. There’s no minimum credit score requirement, and poor credit borrowers are welcome to apply. However, you must have been in business for at least 6 months and have $12,000 in gross sales to qualify.

The Bottom Line

Fora Financial is a great option for ecommerce business owners who need a quick, short-term loan for any business need.

3. Fundera — Best for Startup Loans

Fundera is a broker that connects you with a variety of lenders. You’ll find a variety of business loan types on the platform that would appeal to ecommerce business owners, including SBA loans, term loans, and merchant cash advances. Ecommerce businesses have varying needs depending on their product and process, and the variety of funding options from Fundera allows ecommerce business owners to specifically meet their needs. There are also several options for new businesses with no history.

Pros
Loans available for poor credit borrowers
A variety of loan types, terms, and borrowing amounts
Prequalify with multiple lenders with a single application
Low starting rates
Startup loans available for new businesses
Customer support from a lending specialist
Excellent independent online reviews
Cons
Funding time varies and can be lengthy
Fees vary and can be costly

Since Fundera is a broker, the rates, terms, and fees vary by lender. However, many lenders on the platform offer competitive rates. For example, the starting APR for SBA loans is 2.75%. Fundera doesn’t have minimum credit score requirements or business age or revenue requirements. Poor credit borrowers are welcome to apply, and there are options for startup ecommerce businesses as well.

The Bottom Line

Fundera is best for ecommerce business owners who want to check their rate with multiple lenders in one easy online application. Startups can find a variety of types of funding on the platform.

Try Fundera

4. BlueVine — Best for Line of Credit

BlueVine offers credit lines up to $250,000 with quick approvals, low starting rates, and no monthly fees or prepayment penalties. BlueVine is a great fit for creditworthy business owners who need ongoing access to funds. Ecommerce business owners who don’t want to apply for new credit every time they need it, such as those who need capital for new product drops, may find BlueVine’s line of credit meets their needs.

Pros
Quick and easy online application
Same-day or next-day funding
No monthly fees or prepayment penalties
Rates as low as 4.8%
Access to more funds with positive repayment
Dedicated account representative
Excellent independent customer reviews
Cons
Restrictive eligibility criteria
Not available in all states
Mixed mobile app reviews

BlueVine offers lines of credit from $5,000 to $250,000 with simple interest rates starting at 4.8%. With a BlueVine line of credit, you can draw funds as needed and repay in fixed monthly or weekly payments over six or 12 months. Interest rates will likely be lower than a business credit card and you can borrow more at a time. Ecommerce business owners may find that flexibility suits their business needs. To be eligible for a line of credit from BlueVine, you must have a personal credit score of at least 600, at least six months of business history, and at least $10,000 in monthly revenue. As you make payments, you’ll build business credit and gain access to more funds.

The Bottom Line

BlueVine is ideal for ecommerce businesses that have ongoing funding needs or cash flow issues and need quick access to cash. Online retailers will appreciate the low rates, fast funding, and great customer service that BlueVine offers.

Try BlueVine

5.Torro — Best for Fast Funding

Torro is an online loan marketplace offering multiple funding options for both established and startup ecommerce businesses. The lender offers funding as soon as the next day. You can get working capital, expansion capital, equipment financing, and more from Torro, and not all programs require a hard credit check.

Pros
Streamlined application process with prequalification
Next-day funding
Available to startups
Available to poor credit borrowers
Excellent independent customer reviews
Loans can be used for any purpose
Cons
Fees and rates not disclosed upfront
Stricter credit requirements for new businesses

Torro offers two loan programs, one for established businesses and one for new businesses. As a new business, you can get up to $150,000 in startup capital with a term of 12 to 48 months. You’ll need a minimum 600 credit score and less than five credit inquiries in the past 90 days to qualify. This program is perfect for ecommerce business owners who are trying to launch a website and/or manufacture a product.

Established companies that have been in business for at least six months and have a gross monthly income greater than $10,000 can qualify for up to $500,000 in funding. APRs range from 5.99% to 12.99%. With Torro’s streamlined application process, you can be approved in minutes and receive your funding as soon as the next day. This program is likely to meet the needs of ecommerce business owners looking to expand.

The Bottom Line

Torro is a great option for ecommerce business owners who want to explore multiple loan products and need quick access to cash. Because of the diversity of products offered on the marketplace, Torro business loans can meet virtually any ecommerce business need.

Try Torro

6. SmartBiz — Best for SBA-Backed Loans

SmartBiz works with a network of banks to provide term loans as well as loans backed by the Small Business Administration. SmartBiz is the top facilitator in SBA 7(a) loans. The company also partners with lenders to provide custom financing. Funding time is a bit lengthy but faster than a bank, and rates are competitive. Ecommerce business owners looking for good approval odds and low interest rates will appreciate the features of SBA loans from SmartBiz.

Pros
Streamlined online application
Low rates starting at 4.75%
Pre-qualify without hurting your credit
Flexible repayment terms
Top facilitator of SBA 7(a) loans
Cons
Loan consultants only available during business hours
Strict eligibility requirements
High minimum borrowing amount
7 days or longer to fund

With SmartBiz SBA loans, you can borrow between $30,000 and $5 million with repayment terms ranging from 10 to 25 years. Interest rates range from 4.75% to 7%, and you’ll also pay about $450 in closing costs, a one-time application fee, and an SBA guarantee fee, unless you’re exempt. You’ll need to have been in business for at least two years and have a personal credit score of at least 650 to qualify. SmartBiz term loans also come in amounts ranging from $30,000 to $5 million but have repayment terms of two to five years. Rates start at 6.99%, and you’ll need two years in business and a personal credit score above 660 to apply.

The Bottom Line

SmartBiz is a great option for established business owners with good credit who need at least $30,000 and can wait a week to get their funding. The company’s reputation and highly competitive rates make it a great choice for ecommerce business owners.

Try SmartBiz

Best Ecommerce Business Loans — Features Comparison

Company

Min. Credit Score

Min. Time in Business

Min. Annual Revenue

Loan Amount

Interest Rate

Biz2Credit

575

6 months

$250,000

$25,000 to $2 million

7.99% and up

Fora Financial

None

6 months

$144,000

$5,000 to $750,000

1.1 to 1.3

Fundera

None

None

None

Varies

2.75% and up

BlueVine

600

Six months

$120,000

Up to $250,000

4.8% and up

Torro

600 for new businesses, not needed for established ones

None

$120,000 for established businesses

Up to $500,000 ($150,000 for new businesses)

5.99% to 12.99%

SmartBiz

650

2 years

Sufficient Cash Flow

$30,000 to $5 million

4.75% and up

Why Do you Need an E-Commerce Business Loan?

Running an e-commerce business can be costly, let's break down possible e-commerce business expenses:

  • E-Commerce website ($5,000 to $10,000): Sure, you can DIY your e-commerce website using the simple tools offered on the market, but if you intend to go big, you will need to set a good basis for possible expansion. Ensure the website has all the attributes you need now, and consider the features you will need in the future, including excellent CRM software.
  • The domain name ($2 - $20 per year): This is the most overlooked recurring payment.
  • Hosting (at least $100 per month): You might think that a shared hosting of, say, $20 is a good idea money-wise. However, you're working with customers’ details, and as such hosting security can be a considerable risk. Invest in a decent service and protect your customers.
  • Staff ($200,000): It's easy to get overwhelmed by all the different hats you will have to wear as an e-commerce business owner. Plus, fast growth is one of the defining properties of a successful online business. You need to plan for fast growth so that you won’t be caught off-guard if this does in fact happen.
    1. Web developer ($53,000): Professionally made websites need professional maintenance, so you'll have to keep a contractor on hand to fix bugs.
    2. E-commerce manager ($59,000): Once your business takes off, you'll have to hand over the day-to-day tasks to a manager so that you can focus on other aspects of your business.
    3. Director of e-commerce ($100,000): Although hiring for this position is probably far down the line, it's good to include this expense in your plan.
  • Insurance and fees (local rates): You'll have to research this well, as each state and city may have different rules regarding e-commerce business operations and permits.
  • Payment processor (variable): You should make sure that the payment service you use to receive funds from your customers is secure, fast and straightforward.
  • Marketing (variable): Each additional marketing channel means an added cost. However, marketing is essential to the success of any e-commerce business. You may wish to think about hiring a dedicated marketing team. Later, your business may benefit from a content production team (quality photos, videos, and blogs are crucial to online success).

How Does E-Commerce Financing Work?

Like any loan, the financial lender delivers an agreed-upon amount of capital to a qualified e-commerce company and charges interest and service fees to the borrowing company. Under the terms of the loan contract, the borrower repays the lender on a fixed basis (usually every 15 or 30 days) until the loan is fully repaid.

Before delivering the loan, the lender will vet the business and financial credentials of the e-commerce e-company, via a risk analysis process that focuses on business revenues, credit health, cash flow, and loan repayment history, among other factors.

Once the financial institution green-lights the loan, an automated system is established that delivers the funds to the e-commerce company and, in return, allows the borrower to repay the loan on the specified dates via electronic bank payment.

How to Qualify for E-Commerce Financing?

While lenders will generally review common loan criteria like credit scores, cash flow, and repayment history, e-commerce companies seeking financing should be prepared to expect a full financial review from lenders who may use differing qualification factors.

The best path forward for e-commerce company borrowers is to fully review all business credit reports and, if necessary, consumer credit reports, and make sure those reports show a borrower in good financial standing.

The stronger the credit report, the better an e-commerce company’s chances of landing financing at the desired level. E-commerce company borrower should also be prepared to answer questions on how long the company has been in business, sales revenues, debt-to-capital income ratios, any tax records, business plans, and other company financial documents.

If that documentation is in order and demonstrates the borrower is a good steward of the company’s finance, that also boosts the odds of the business qualifying for e-commerce financing.

How To Apply For E-Commerce Business Loan?

In general, e-commerce financing is available through traditional finance lenders like banks, credit unions, angel and venture capital investors, peer-to-peer lenders, and through government agencies like the U.S. Small Business Administration.

Once the best lender is identified, the e-commerce company should have the proper loan documentation prepared, including:

  • Bank and tax records
  • Accurate credit reports
  • Company financial statements
  • Personal financial records and credit reports, if the borrower is taking out financing in his or her name, and not the company’s name.

The lender will provide a loan/financing application that the e-commerce company needs to complete accurately and thoroughly. That’s important, as any missing or incorrect application information may be enough to have the financing request rejected.

Expect the application to include requests for business and personal information, like name, address, phone number, email address, banking partner, credit information and, if needed banking and tax information dating back two years. The e-commerce company may also be asked to include company financial information lie annual revenues, balance sheets, profit and loss statements, and existing debts, along with any relevant business permit or articles of corporation.

Once the application is complete, the e-commerce company submits the application to the financing company, which will review it. It’s not uncommon for lenders to reply with questions or request more information to better vet the loan application.

If the loan application is approved, the e-commerce company should review the loan terms, review the loan contract’s fine print, and have the lender layout the final finance closing process. It’s a good idea to have a trusted business associate, financial advisor, or attorney review the loan contract for accuracy and thoroughness.

Tips for Getting an E-commerce Business Loan?

While there’s no shortcut to obtaining e-commerce financing, there are several savvy tips to help get the job done. These suggestions are at the top of the list.

  • Expand your range of financing possibilities. Focusing on a single e-commerce financing provider may be short-sighted, as not all lenders are alike. To cover all the bases, obtain financing quotes from at least three lenders and make sure to review their loan terms.
  • Know what you need. Not all e-commerce companies are alike, either. Consequently, one e-commerce company may opt for an equity line of credit to tide them over lean seasonal business periods. Or, another e-commerce company may require a fixed loan to cover its financial needs over the course of a year or more. Knowing what your e-commerce financing needs is a big “Step One” in getting the financing suited to your company’s unique needs.
  • Explore financing alternatives. Not all e-commerce financing models are alike, either. If a bank or other traditional lender doesn’t meet your financing needs, turn to alternative lenders like peer-to-peer lenders, angel investors, or crowdfunding sources to get the financing your e-commerce company needs.
  • Improve your credit picture. Well in advance of filing any loan application, make sure your business and/or consumer credit score is in robust condition. Credit health may be the most important factor when applying for e-commerce company financing.

Are There Other Ways to Fund an E-commerce Business?

If the traditional route to e-commerce financing, like term loans or business lines of credit, doesn’t bear fruit, there are solid financing alternatives, as follows.

  • Microloans: These loans are smaller in size than traditional business loan amounts, but they can still net a company as much as $50,000 (or as little as $1,000), depending on your e-commerce financing partner. If your business needs are modest, a microloan lender can seal the financing deal.
  • Peer-to-peer loans: Peer-to-peer financing platforms have grown substantially as digital lending has gone mainstream. Peer-to-peer lenders enable e-commerce companies to gain financing without having to relinquish any control over your company. For companies just starting out and who don’t need large amounts of financing, peer-to-peer lenders are well worth a closer look. Credit reviews tend to be more lenient with peer-to-peer lenders, as well.
  • The U.S. Government: Uncle Sam can ride to the rescue of an e-commerce company via a U.S. Small Business Administration loan. Like with any government entity, the SBA paperwork process can be lengthy, but if you’re in no rush, the SBA is open to financing U.S. small businesses, especially during the ongoing COVID pandemic. A bonus: SBA financing is backed by the U.S. government, so you know you’re dealing with a stable e-commerce financing partner.

Conclusion

Ecommerce business owners who need the funds to start or expand their business have a variety of online options for ecommerce business funding with faster approval times and looser eligibility requirements than traditional banks. To find the best loan for you, narrow down your options to lenders and platforms that you can qualify for, and then pre-qualify with lenders who offer a soft credit pull. New business owners will likely find that Fundera or Torro best meets their needs, while creditworthy established businesses may want to consider SmartBiz. Biz2Credit and Fora Financial are great options for poor credit borrowers, while BlueVine offers a line of credit that could appeal to certain ecommerce business owners with an ongoing need.

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About the Author

Lindsay Frankel

Personal Finance Expert

Personal finance expert with 3 years experience specializing in researching, writing, and editing insurance, loans, and credit cards content.

More about me