Ecommerce financing: What are your options?

As an ecommerce business looking for funding, you’ve probably experienced the following: 

• You need funding as soon as possible, but you don’t want to wait weeks to get accepted for a bank loan and even longer to get the funds. 
• You’re looking for more flexible financing. You want to avoid committing to a multi-year term loan, and you’d prefer funding that is always available: without having to make al on application. 
• You’re reluctant to give a personal guarantee. You don’t want to put your personal assets, like your home, at risk. 
• You’re an Irish ecommerce business and need a financing partner that can fund you in Ireland. 

At Financefair, we’ve helped many ecommerce companies grow, using facilities like revenue-based finance and business lines of credit. We’ll discuss these two facilities in depth and how they can benefit an ecommerce business.  

In this article: 

• What are the finance options for an ecommerce company? 
• Revenue based financing
• An example of this in practice: How revenue-based financing helped this ecommerce business grow without debt or equity
• Online business line of credit
• Why choose Financefair?

Wondering how we can help you grow? Get in touch with our expert team

What are the funding options for an ecommerce company? 

Bank loans are the most common form of funding for most businesses. But there might be some other funding options that you’re not aware of that might be better suited for a growing ecommerce store:

At Financefair, we can offer ecommerce businesses revenue based finance and line of credit. We’ll go on to explain each option in more detail to help you decide if it’s right for your business. 

Both revenue based finance and line of credit can be used alongside other finance options, including bank loans and VC. 

Rather get started right away? Get in touch

Revenue based financing: capital that grows with you

Revenue based finance is a financing facility that unlocks trapped liquidity in your business. 

The funds a lender will advance are directly linked to your future business performance. This means you won’t over or under-borrow – which is especially important for an ecommerce business, where sales can ebb and flow.

At the time of writing, Financefair is the only revenue based finance provider in Ireland. 

Here is our eligibility criteria for revenue based finance:

• Limited company in Ireland – at least two directors
• You’ve been trading for at least one year
• Minimum turnover of €1m

Our experts will examine your projected revenue and predicted growth trajectory over the next year. This information allows us to calculate your maximum funding requirement (how much you might need within 12 months).

From there, we can offer you a maximum of either:  

• 20% of your Annual Recurring Revenue (ARR)
• 70% of your quarterly revenue

We can pay your funding monthly, quarterly, or a mixture of both.

Our goal is to ensure that you have the capital you need to manage any cash flow pinches and take advantage of growth opportunities. For example, we might offer your company a credit line of €500,000 for the year. We’ll initially release €200,000 and disburse the rest of the funds when your business experiences a cash flow dip.

And because your available funding depends on your company’s projected revenue, you can access higher funding levels as your business grows.

If your company’s projected revenue decreases, we’ll advance fewer funds but won’t cut off your facility. And because we’re a fintech company, we can use advanced data analytics to determine how your company is performing and be proactive, without the need for constant check-ins.

Learn more in our revenue based financing guide. 

How much does revenue based financing cost?

The costs of revenue-based finance are transparent––you’ll know what you’ll pay at the start of the 12-month agreement. There are no hidden costs. 

We’ll calculate your fee based on:

• Your company
• Your company’s experience
• Average debtor days
• Average debtor book
• Turnover
• Funding limit
• Credit score

You’ll pay:

• Platform fee: This fee covers your joining our platform. If you stick with your facility after one year, you’ll pay less. The renewal fee is 50% of the initial platform fee.
• Monthly facility fee: This is the fixed fee we charge you based on the facility limit we’re providing. 
• Discount charge: We can offer you a discount on pricing based on your credit history.

You have two options in how you pay for your funding: 

1. Per 30 days
2. As a percentage of the cost of funding

Here’s an example of what revenue based finance might cost your business: 

Please note: actual costs depend on the individual circumstances of your business 

To get a more specific cost for your business, try the calculator on our revenue based financing page. 

The benefits of revenue based financing

Revenue based financing is an excellent option for ecommerce businesses in a growth stage.

Here’s why: 

• You’ll receive funding that aligns with your business’s expansion. This approach minimises the risks associated with borrowing too little or too much, allowing your funding to grow concurrently with your growth. 
• It offers flexibility without the need for a lengthy commitment. In contrast to traditional term loans, revenue based financing doesn’t lock you into a multi-year contract.
• There is no extra paperwork required. If you need more funds to capitalise on growth opportunities, you won’t have to submit a new application. You can simply contact our friendly team.
• Less admin and paperwork. Revenue-based financing is a relatively low-risk form of lending. We only advance funds for 90 days at a time, so we need less security documentation, reducing admin time. 
• Revenue-based financing is compatible with other investment types, including traditional bank loans, venture capital, and angel investments.

When does it make sense to use RBF as an ecommerce company?

If your ecommerce business encounters any of the following, revenue based finance can help:

• You experience seasonal fluctuations, with your sales ebbing and flowing throughout the year. Revenue based finance offers the flexibility to manage inventory and marketing efforts in line with these peaks and troughs, allowing for strategic investments during high-demand periods without the pressure of fixed repayments in slower seasons.
• You’re aiming to expand your product range or enter new markets, so you need an immediate capital injection. Revenue based finance provides scalable funding aligned with your sales performance, so you can facilitate growth without overburdening your business financially with long-term debt.
• You want to take advantage of bulk-buy stock discounts. As an online seller, understocking can significantly affect your profitability – but you might be nervous to invest too much capital into stock. Revenue based finance gives you the confidence to manage stock levels, and take advantage of bulk-buy discounts. 

An example of this in practice: How revenue-based financing helped this ecommerce business grow without debt or equity can grow an ecommerce business

Imagine your Shopify ecommerce business experiences a monthly revenue growth rate of 25%, starting from an initial revenue of €250,000. This growth trajectory forecasts the following revenues over the next six months:

After taking the time to discuss your business needs with you, we agree to advance funds based on your revenue forecast, starting quarterly (for an initial boost of capital) and then moving to a monthly basis.

Here’s how it works: 

Initial quarterly advance: 

• At the start of month 1, we offer an advance based on 70% of the combined forecast revenue for the first three months (€250,000 + €312,500 + €390,625 = €953,125).
• Therefore, 70% of €953,125 equals €667,188. This is the amount we’ll initially advance at the start of month 1.

Monthly advances: 

• By the end of Month 1, with your anticipated revenue of €250,000, you will be positioned to start repayments. Specifically, you’ll repay 70% of the funding we advanced based on your Month 1 revenue. This means you will repay €175,000 at the end of Month 1 (70% of €250,000).
• With your quarterly advance paid, as agreed, we’ll move to a monthly advance schedule. At the end of Month 1 (or the beginning of Month 2), we will advance 70% of your projected Month 4 revenue, which amounts to €341,797 (70% of €488,281).
• At the end of Month 2, upon receiving your actual revenue of €312,500, you will repay 70% of this amount, totalling €218,750.

This pattern continues with advances and repayments based on the upcoming month’s projected revenue and the actual revenue received.

In this scenario, the advances you receive functions as a revolving credit line, grounded in your projected income for the upcoming month. This setup enables you to leverage your forthcoming revenue as a means to grow. 

With the financing in place, an ecommerce company can use the funds to:

• Capitalise on bulk inventory discounts to enhance profit margins.
• Address cash flow variances, ensuring smooth operation despite sales fluctuations and securing timely payroll and contractor payments.
• Boost digital marketing efforts across SEO, social media, and pay-per-click campaigns, driving sales and expanding its customer base.
• Invest in new product development, or expand your base of operations 

Through Financefair’s revenue based financing solution, an ecommerce company can sustain its upward trajectory and lay a foundation for future growth – without taking on long-term debt or diluting equity. 

Wondering if revenue based finance might be the right business funding for you? Apply today 

Online business line of credit: only pay for the funding you use 

An online business line of credit works like a digital overdraft. You have a line of funding you can tap into when you need to, and you’ll only pay for what you borrow. The credit line is revolving, so once you’ve paid it off, it’s accessible again.

This form of business financing is usually better suited to online sellers that aren’t quite ready for revenue based financing, and looking for yearly funds from €10,000 to €250,000.

Here are the eligibility requirements:

• Must be an incorporated limited company registered in Ireland.

• Have been operating for a minimum of one year.
• Achieve a yearly turnover of at least €250,000.

As an ecommerce business, you’ll know that it’s common to encounter cash flow challenges during specific periods of the quarter. You might also be looking for funding to take advantage of business growth opportunities. 

A business line of credit offers fast and easy access to working capital. With Financefair, you can transfer funds and receive them within 24 hours.

This method is significantly more convenient than traditional funding solutions, like business loans, which require a commitment to a set duration (usually three to five years). Unlike with a loan, you can pay off your credit line, and instantly have access to that funding again. There’s no need to re-apply. 

While many banks provide business lines of credit, they often require you to hold a current account with them (usually for at least a year). 

Financefair is the only provider in Ireland that offers a standalone business line of credit, without needing an accompanying bank account. 

Our pricing structure is clear and straightforward: charges usually vary between 0.75% and 1.50% every 30 days, based on the specifics of your business.

You’ll pay: 

• A monthly fee ranging from 0.6% to 0.75%
• The fee for joining the platform
• A potential discount based on your credit rating

How much funding could you get?

Your approved line of credit depends on your annual turnover. Here are a few examples: 

The benefits of business line of credit

There are four key reasons to consider a business line of credit: 

1. Flexibility: A line of credit offers the flexibility to finance key milestones within your business. Whether it’s upgrading costly equipment as part of your operational growth, or advancing product development, a line of credit means you always have an easy-to-access source of capital. 
2. Fast access to capital: If you’re presented with the chance to bid for a significant client but need assurance of upfront capital for delivery, a line of credit can be tapped into, with payment received in just 24 hours.
3. Only pay for what you use: With a line of credit, you only pay for what you use, avoiding any long-term financial obligations. It’s also a revolving line of credit, so you can reaccess those funds once you pay off what you owe. 
4. No dilution of equity or personal guarantees: Opting for a line of credit doesn’t dilute equity, and we don’t require a personal guarantee. As a business owner, this means your business equity remains intact, and your personal assets are not at risk.

A business line of credit gives you the peace of mind that funds are available whenever yo need them. 

Apply today in just 5 minutes

When does it make sense to use line of credit as an ecommerce company?

Line of credit differs from revenue based finance in that it’s not tied directly to your projected growth. Instead, it works more like an overdraft and might be a better fit for early-stage ecommerce businesses who: 

• Need immediate, flexible access to capital for short-term needs. With a line of credit you can access funds only when you need them, and you aren’t penalised for having an available line of credit. You only pay for what you use. By having a line of credit facility, you can better prepare your business financially for short-term business expenses, without the commitment of a loan.
• Are looking to smooth out cash flow irregularities. Ecommerce businesses often experience volatile cash flows due to seasonal sales patterns or varying payment processing times. A line of credit can provide a buffer to manage these irregularities, ensuring you have capital on hand to cover operational expenses as they arise.
• Would prefer a revolving fund without a direct tie to revenue. If you’re an early-stage ecommerce business, your projected revenue may not be strong enough yet for revenue based finance.  A line of credit offers similar benefits by giving you a revolving fund you can draw from, payback, and then draw from again, offering ongoing access to capital. 

Looking to learn more about other types of financing? Read our other guides:

• Invoice discounting: How to get started
• Term loans: What you need to know, and the alternatives

Why choose Financefair for your ecommerce financing? 

Both revenue based financing and line of credit can be a powerful growth tool for ecommerce businesses. But what makes Financefair the right finance provider for you? 

Here are three reasons to consider us: 

1. Our innovative business model means you can get more funding

Thanks to our innovative business approach, we can offer significantly more funding to ecommerce businesses than banks might be able to. 

Banks’ funding is limited to their balance sheet. At Financefair, we collaborate with a network of investors ready to provide financial support for your business’s expansion.

This could mean securing 30% of your funding from one investor, 40% from another, and varying percentages from additional sources. 

This diversification strategy allows us to offer higher funding levels than what’s typically available through conventional lenders.

2. Low commitment: flexibility to switch financing solutions with ease 

Both revenue based financing and lines of credit offer greater flexibility than traditional bank loans. There’s no need to wait for a term loan to conclude before seeking additional funds.

For even more flexibility, transitioning between financing solutions at Financefair is straightforward.

For instance, if you’re in the early stages of your ecommerce business, a line of credit may initially suit your needs. But as your business and revenue grow, you might outgrow this option and need a higher level of funding. 

At that point, our experts can help you switch to a better solution, like revenue based finance, without having to go through a funding application process again. 

3. Receive an indicative offer in just one day 

Waiting for funding approval can be tedious and disheartening, especially when the offer falls short of your expectations.

With Financefair, you can get an indicative offer within a single business day. Once we’ve gathered all the necessary documentation and fully onboarded you to our platform, accessing funds can take as little as 24 hours.

Thanks to our innovative platform and analytics capabilities, we can access real-time account data to make fast funding decisions and minimise wait times. 

Additional advantages of choosing Financefair include:

• None of our facilities require sacrificing equity in your business.
• We are the sole provider of both revenue based financing and independent business lines of credit in Ireland.
• You don’t have to put your home and personal assets at risk: we’ll never ask for a personal guarantee
• Our pricing is transparent from the beginning. There are no hidden fees or hidden charges.

Got questions?  Contact our team, who will help you find the best funding solution for your business 

Grow your ecommerce business with flexible funding options from Financefair 

For a growing and ambitious ecommerce business, traditional bank loans often don’t cut it –  due to their long approval times and inflexible terms.

In this article, we’ve explored more innovative financing solutions that align with the unique needs of ecommerce businesses in Ireland: revenue based finance and online business line of credit.

Whether you’re navigating seasonal sales fluctuations or looking to expand, Financefair’s founding solutions offer the support your business needs to thrive.

Ready to fuel your ecommerce growth? Get funded