One of the biggest challenges facing many entrepreneurs and online business owners is getting ahold of the resources to launch a company and keep it growing. Among the many financing options available, you may be thinking about bootstrapping or crowdfunding your business, asking friends and family, or going all-out and making a commitment to investors.
These are certainly viable options, but at E-Commerce 4 IM, we’ve been following recent trends showing greater flexibility and opportunity when it comes to financing. We’ve seen increased approval rates and financial options for many small businesses and e-commerce enterprises, and we don’t expect this fast-moving trend to slow down anytime soon. This is great news for mapping out different types of financing when creating your business plan.
Today’s (and Tomorrow’s) E-Commerce Funding Trends You Should Know
The National Federation of Independent Businesses (NFIB), America’s leading small business association, conducts an Index of Small Business Optimism that shows expectations for increased employment, inventories, sales, and plans for expansion, among others. As of April 2017, small business optimism was riding a wave of historical highs. The most pressing problems, reported by small business owners, were taxes (21 percent), regulations and red tape (17 percent), and availability of qualified labor (16 percent).
Worries about e-commerce or small business funding, however, is pretty low on this list, and there’s a good reason. Across the board, statistics related to the e-commerce industry are increasingly attractive, from the increased numbers of shoppers on mobile and desktop devices to improving technologies such as digital assistants and artificial intelligence. As a result, the e-commerce industry is experiencing a healthy level of growth, more millennials are interested in funding and growth, and financing companies are responding and are more open to providing venture capital for e-commerce funding.
E-commerce growth and small business optimism are on the rise and recent trends have shown that financiers are more willing to support your business prospects, whether as a startup or a growing company. Nevertheless, the market is quite broad and knowing where to start can be quite disorienting. No matter your industry or working capital, we at E-Commerce 4 IM are happy to talk about recommendations and options, some of which include:
Facing a new business opportunity? Need to take care of some immediate needs of your business? Things are looking dim and there’s a cash-flow shortfall? If you answered “yes” to any of these questions, then short-term funding may be a suitable option for you. Short-term funding is based on your projected sales or outstanding invoices. Also, collateral and a perfect credit score are usually not required, and nearly every industry can acquire short-term financing.
Invoice funding is another popular method for fixing cash-flow issues and getting some much-needed funds for any project you have. For this method, you’re essentially turning unpaid, outstanding invoices into ready cash. The underwriting process for invoice funding is typically based on your customer and not your business. This includes customers you will rebill if your business is a monthly billing or recurring model.
Merchant Account Funding
For a variety of e-commerce businesses, merchant account funding can serve as a flexible financial tool for emboldening your cash-flow. This model sometimes includes a merchant account that can fund your business account based on your transactions, allowing you to convert sales quickly and use your merchant account to take care of business obligations. Lender payments are, usually, based on a percentage of credit card transactions.
Growing or expanding your business is going to cost a pretty penny, especially when you need to add equipment. Equipment financing remains a streamlined way to acquire new equipment without tying up business capital. The approval process is fairly quick and you can choose among both loan and lease options. There may be potential tax advantages as well.
For many companies, finding the right financing method is the easy part; getting approved is another story, especially if you have bad credit, your company has been doing business for less than two years, or you’re a high-risk e-commerce enterprise. Due to recent trends in e-commerce and small business funding, however, more high-risk businesses are getting approved for a variety of financial products and other solutions for fixing cash flow issues.
At E-Commerce 4 IM, we’ve been in the e-commerce and high-risk merchant industry for some time, and we’ve certainly built up a wide network of contacts and sources to help connect you to a company that can solve your company’s cash flow needs. For more information about your business or e-commerce financing options, call E-Commerce 4 IM at 1-800-570-1347.