post by:
Michael Goldstein
You’ve started your e-commerce business and you’re ready to grow. Maybe you need more manpower and are looking to hire additional staff, or you’re looking for marketing tools to make your company more visible to your target market. Growth requires capital, and sometimes it can be challenging for businesses to grow at the rate they want without external funding. Luckily, there are organizations that provide financing for e-commerce startups specifically. We have compiled a list of five resources, along with their benefits and limitations, that are available to you as you secure the money needed to scale your e-commerce business.
1. Shopify Capital
Before getting into the specifics of this option, it’s important to know that this funding option is provided by Shopify directly to Shopify sellers. If your company does not sell through the platform, this would not be a viable funding option for your business. Shopify will take a percentage of sales until the repayment amount is met, almost like an income-based repayment plan on student loans.
Your store must meet a minimum amount of sales, be considered low risk by Shopify, and be a profile located in the U.S., Canada, or U.K. Offers for this funding will be sent straight through the seller dashboard and you do not need to specifically apply.
Whether you are looking for a long-term solution, short-term funds to solve an immediate cash flow issue, or a mixture of the two, there are funding options for your eCommerce company.
2. 8fig
The goal of 8fig is to aid eCommerce businesses in growing to become 8-figure sellers. 8fig is designed for eCommerce sellers that want to scale their business rapidly. This resource is helpful to sellers who have at least $100,000 in revenue over the past 12 months, or monthly revenue of over $8,000 for the last 3 months.
8fig is an especially attractive resource if you’re not interested in parting with any equity. The company uses AI and seasoned eCommerce experts to determine the plan that is best for your startup. According to their website, they will not place limits on the amount of capital your company will qualify for. Their services are APR based and usually land between $6,000-$8,000 for every $100,000 8fig puts into the company.
To apply, 8fig will request access to some sales reports on your chosen platform(s), as well as access to view your bank account to view your cashflow. They focus on long-term partnerships with eCommerce sellers, and won’t provide single lump sums of cash.
3. Clearco
Another option for experienced sellers is Clearco. In Clearco’s model, they’ll pay any invoices your company has so that your capital is freed up for increased growth. ClearCo will fund eCommerce, subscription-based and SaaS companies as long as they are LLCs and have six or more months of cash flow exceeding $10,000 each month. Two of the most popular ways that companies have used Clearco funds in the past is in marketing or inventory. ClearCo does not require a minimum credit score for funding and will allocate funds ranging from $10,000 all the way to $10 million.
Clearco is looking for a long-term relationship. They require a daily repayment schedule and once the initial funding is paid off, the amount your company is eligible to receive increases. Take into account that daily remittances are not suitable for every business.
Clearco is transparent about its terms upfront, and they promise that fees will never increase throughout the payment period. For example, if Clearco provides you with $100,000 in funding at a rate of 15%, you’re responsible for paying them back $115,000. Repayment is simple, they will take a percentage of your sales each month until the funding is repaid.x
Editors' Choice: 8fig
Learn more about the editors’ choice, 8fig empowers entrepreneurs to thrive and become an 8-figure sellers without parting with any equity.
4. Wayflyer
Like the other options mentioned here, Wayflyer is focused on helping you scale your business. It has a higher barrier to entry with an average of $20,000 in monthly sales and have been in business for six months. Additionally, Wayflyer only offers funds to eCommerce businesses incorporated in the following countries: United States, Canada, Germany, the United Kingdom, Ireland, Spain, The Netherlands, Belgium, Sweden, Denmark, Australia or New Zealand.
Wayflyer cost ranges between 2%-8% of sales. In addition to funding, Wayflyer has an analytics dashboard and access to a team of marketing professionals to help businesses scale quickly.
5. Payability
Payability offers sellers Instant Access. They leverage the fact that it can take a while (weeks or months) to receive payouts from platforms such as Amazon, eBay, Shopify etc.
It’s their goal to cover that gap so that businesses can grow instead of waiting for these funds to land in their accounts. To do this, Paybility will give you up to 80% of funds earned today through your business instantly, instead of waiting for the payout to come. They will then provide the remaining 20% when the payout is received from the eCommerce platform. To qualify, they require $10,000 revenue a month and a minimum 3 months sales history.
For their service, Payability charges a flat fee 0.5% to 2% on average from gross sales – not net sales. This can end up a decent amount being paid for their service. In addition, some mixed Trustpilot reviews highlight additional fees and some difficulties with their cancelation policy