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Why Having Access to Multiple eCommerce Funding Options is Critical for Merchants

One of the most challenging aspects of growing an eCommerce business is getting the funding to launch and continue growing your company. It’s important to understand all of the eCommerce business funding options available so you can determine which one or which combination of options works best for your business and goals.

Yardline understands that each company and owner has different priorities and needs, which is why we provide a wide range of eCommerce funding options for you to choose from. Each type offers unique benefits and limitations, so let’s look at them in more detail.

Business Lines of Credit

Taking out a business line of credit is especially popular for companies when they need to:

  • Purchase a new piece of equipment
  • Purchase extra inventory for a busy holiday period
  • Hire a new employee to meet a rise in product demand
  • Survive temporary dips in sales and cash flow

There are two types of business lines of credit—secured and unsecured. You need to present collateral for a secured line of credit. You can obtain an unsecured line of credit without collateral. However, the process tends to be longer. The unsecured option increases the risk to the lender, which means that they require more from the borrower, including:

  • A track record of generating revenue
  • Good business credit rating
  • Good personal credit rating

The unsecured line of credit typically provides access to a lower amount of funds at higher interest rates.

Alternative Overdrafts or Revolving Credit

Alternative overdrafts or revolving credit are another option. This provides you with funds that you can access as you need it. The fixed credit limit can range from $2,000 to $1 million based on your revenue.

Perfect For:

Businesses with cyclical capital needs looking to:

  • Scale your marketing budget
  • Manage inventory orders
  • Relieve seasonal cash flow strains


  • Flexibility
  • Only pay interest on the credit you use
  • Lower interest rates and fees as compared to most eCommerce funding options


  • The application process can be complicated, requiring financial statements, profits and revenue reports, cash flow, tax returns, personal credit history, and more.
  • Collateral is typically required to qualify.
  • For some lenders, your business must have been in operation for a minimum period before qualifying.
  • It can be difficult to persuade a lender to increase the credit limit, making it difficult for businesses that grow quickly and need access to more funding.

Revenue Based Financing

This is sometimes referred to as revenue-based funding or a merchant cash advance. Revenue-based financing typically enables companies to borrow between $10,000 and $5 million in as little as 24 hours. Each month, the funder collects a portion of your revenue (typically between 5 to 25%) until the financing is repaid in full. The cost of these advances often ranges between 6 and 20%.

Because the repayment is based on your revenue, the repayments can fluctuate based on the revenue your business generates. If your company has a good month, you’ll repay a higher amount, enabling you to pay off quicker. If your revenues dip the next quarter, you will pay less, which provides a bit of cushion when you need it.

Perfect for:

Businesses with established revenue that also:

  • Need funds for marketing or inventory
  • Need a quick cash injection
  • Lack personal or business credit history


  • No need for a business plan or pitch deck
  • Fast approval and funding – often in as little as 2-3 business days
  • Not secured by any hard assets like real estate
  • No personal guarantee of repayment
  • No loss of equity in your company—maintain full ownership and decision-making power.
  • Repayment as a percentage of sales can be optimal for a seasonal business


  • While the repayment structure is flexible and adapts to your revenue, an extended period of slow growth can still put pressure on your company’s cash flow.
  • Can be more expensive than loans or other products

Small Business Loans

Small business loans are another option for ecommerce merchants. Ondeck, Kapitus, Funding Circle, and Sellersfunding are a few examples of lenders to consider. Though the terms vary by lender, here are some pros and cons to consider based on the four examples previously listed. Many companies also offer additional benefits, such as dedicated support agents and advances on Amazon revenue to help ecommerce merchants maintain a healthy cash flow.

Perfect For:

Well-established businesses with good personal and business credit history that aim to grow by:

  • Buying more inventory
  • Launching new products
  • Expanding or hiring


  • Loan amounts from $5k to $5M.
  • Quick application process without a hard credit pull.
  • Some approvals happen in as little as 4 hours with funding distributed in as little as 24 hours.
  • Repayment terms of up to 84 months. Some even offer interest-only payments for the first few months.
  • Some enable companies to apply for more once they pay down half of the amount.


  • Requires healthy personal and business credit scores
  • Minimum revenue is required—the low end is $50k
  • They are typically not suited for brand new companies since they require a minimum number of years in business (1-2 years on the low end).

Small Business Administration (SBA) Loans

The US Small Business Administration partners with certain lenders to ensure that small businesses have access to necessary loans. The amounts can range from $500 to $5.5 million, and the SBA serves as the intermediary to make the process easier for both borrowers and lenders. They take on the responsibility of qualifying reputable lenders and borrowers and, as result, can offer low-rate options over long terms..

Perfect for:

  • Buying an ecommerce business
  • Expanding your product line
  • Investing in technology or expansion
  • Refinancing short-term debt


  • SBA removes some of the risk and legwork for companies by filtering out lenders who are not reputable.
  • Counselors with the SBA provide support to borrowers to help them successfully secure and pay back loans.
  • They provide programs specifically to eCommerce companies that export products to other countries. Financing for exported products can be difficult to find from other lenders.


  • SBA loans require a positive financial track record that dates back several years, so it is not typically available to new businesses.
  • This is not a good option if you need funds right away. SBA loans are notoriously slow to process.

Personal and Business Credit Cards

Many eCommerce merchants prefer to use personal and business credit cards because they offer flexibility, much like the revolving credit option. You can use the money you need and there are varying interest rates depending on on the card you choose. Options will vary based on a number of factors, including your location, so you’ll want to shop around for the type of card and terms that work best for you and your business.

Perfect For:

New or established business looking to:

  • Build personal and business credit while earning valuable benefits for recurring costs
  • Benefit from spending on media costs and recurring subscriptions


  • In addition to eCommerce business funding, many credit cards offer additional perks and rewards like hotel points, airport lounge access, airlines miles, or cash back incentives that can save your company money.
  • You can manage your cash flow and keep personal finances separate by charging business expenses to your credit card.
  • There are typically 0% APR offers available, which are incredibly helpful as long as you can pay your debt off prior to the expiration date.


  • It’s important to not take on more credit card debt than you can afford. There is risk in building a mountain of debt that you can’t climb out of.
  • Credit cards without zero or low APR offers often have high interest rates and annual fees. Even 0% APR offers will expire, often leading to a higher standard APR for your card.
  • White credit cards can be easier to access, they often provide low credit limits that are insufficient for the full range of business needs.

PO & Invoice Factoring:

PO Factoring

Purchase Order (PO) factoring enables companies to ensure a steady inventory without the need to invest money upfront. The PO factoring companies essentially provide an advance to your business to fund your orders from suppliers. Rather than collecting a monthly payment from you, they collect the payments directly from your customers, deduct their fees, and then send the remaining balance to your company. Because of the nature of PO factoring, it is only relevant to companies that supply physical products (not services).

When inventory runs dry, it’s more common for customers to seek similar products from your competitors rather than waiting for the items to come in, which is why it’s crucial to ensure your eCommerce store is well stocked. If a lack of cash flow is leading to issues with product supply and you are worried about frustrating customers by being out of stock on in-demand items, PO factoring could be beneficial.

Perfect For:

Wholesale businesses that need to fulfill orders that would otherwise not have the free cash flow to support manufacturing costs.


  • The payment process is handled for you
  • There are no monthly payments to worry about since it’s taken from your revenue automatically
  • It’s easy to qualify even with a poor credit rating
  • This option is start-up friendly since they have lenient requirement as compared to traditional business loans
  • There is no collateral necessary.
  • You can accomplish multiple goals by freeing up cash flow to spend on other business needs.


  • There are often high monthly fees that can equate to 20 – 75% APR, which is really expensive compared to most small business loans.
  • PO factoring lacks flexibility since they can only be used for purchase orders. You will need to find other financing options for different business needs.
  • Because customers work directly with the lender rather than your business, the fact that your company is using a lender is transparent, which could call into question the overall success of your company.

Invoice Factoring:

Invoice factoring is a bit different. Your company still receives an advance from a factoring company, but in this case, it is for unpaid invoices from another business for items that you already sold. Rather than paying your invoice directly, the businesses that owe you will pay the invoice factoring company directly. Stated another way, it is like selling your unpaid invoices to a third party in exchange for a cash advance.

For this convenience, eCommerce merchants will typically pay a fee of 1 to 5% of the invoice amount. This option is more popular in the B2B realm where payments are handled through invoicing.

Perfect For:

Businesses with receivables that are not going to be paid for up to 120 days that need to access the capital sooner.


  • Access to this funding is easier than traditional loans because the invoice factoring company assesses the credit score of the customers rather than the business. If your company has a lower credit rating than your customers, this is a good option.
  • Companies will benefit from healthier cash flow by eliminating the need to wait for payments.
  • There is no collateral required.
  • You can typically access funds within 24 hours rather than waiting for weeks to receive a traditional business loan.
  • Eliminate the hassle of chasing down late payments.


  • You have less control over your customer experience because a third party is now handling the payment process. If they do not handle it well, then it could reflect poorly on your business. By inviting a “middleman” in to your business process, you may lose a sense of connection with your customers as well.
  • Hidden fees are prevalent in invoice factoring contracts, so be sure to read the fine print.
  • Contracts with factoring companies are often long-term, lasting several years. This is difficult for companies with rapidly evolving needs. You may also be unable to make changes even if the factoring company causes problems with your customers.
  • Not relevant to B2C businesses since they typically do not issue invoices.
  • If your customers have high credit risk, you are unlikely to be approved.

Inventory Financing

Inventory financing is another great choice when you know that demand will rise and you need to make sure you have enough supply to meet your customers’ needs. There are two forms of inventory financing—inventory loans and inventory lines of credit.

The inventory loan provides you with a sum of money to purchase your inventory. The inventory line of credit approves an available amount that you can use to purchase inventory, but you have more flexibility in terms of how much you actually use. It is important to note that one key difference between the loan and line of credit structures is that the line of credit only requires you to pay interest on the amount of money that you use. If you receive the loan, you will incur interest on the full amount of the inventory loan.

Perfect For:

Businesses that have inventory on hand or specific inventory purchases and need to leverage the stock to free up cash flow or obtain financing to complete the manufacturing process.


  • No additional collateral is required because the inventory serves as the collateral.
  • Your business credit rating is typically not required.


  • Because this financing is based on inventory, the lender may require a visit to your physical store to inspect the quality of the inventory.
  • You may have to pay or the onsite visit.
  • This is not a good option for eCommerce companies that have unpredictable sales cycles. If you cannot sell the inventory, you may not be able to pay back your lender on time, which also jeopardizes future financing options.

Let Yardline’s eCommerce Funding Solutions Help

Order more inventory, launch new products, and run more ads with Yardline’s one-stop shop for personalized eCommerce funding. With one simple application, Yardline provides eCommerce businesses with access to a range of funding options for sellers (including the ones listed above). With Yardline, you can obtain funding from $5k up to $20mm in as fast as 24 hours, which will help your company improve operations, increase profitability, and promote business growth. Yardline is category and platform agnostic, so you can trust that our priority is matching you with the best eCommerce business funding options for your unique needs and goals.

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