How do you find financing for an online store? Starting an online store is an exciting prospect. After all, it means you get to sell products – either those you make yourself or those you dropship – to people all over the country, or even the world.
While there are tons of benefits of running an online business in this fashion, a lot of new responsibilities come with it as well. For instance, managing inventory can be a real struggle. And if you’ve just invested in starting your business, securing funds to maintain inventory until you begin to turn a profit can be a real challenge.
This is why many small business owners opt for financing. Including WooCommerce stores.
Why Consider Financing?
Even though many businesses secure financing to get off the ground, there’s a misconception that internet-based businesses don’t qualify or wouldn’t benefit. However, this is simply not the case. Starting a business (or expanding one) can be daunting and expensive, even if you’re using WordPress. And finding ways to get your hands on financing is often a smart way to give your company a jumpstart.
But if you’re just beginning, it might be difficult to secure a loan through a traditional bank. This is especially true if you have less than stellar credit (or none at all). That’s why we’ve put together a list of suggestions for lenders that serve small businesses, online stores, and even sole-proprietors.
Who Could Benefit?
So yes, if you have a WooCommerce store, you could potentially qualify for one of the financing options we’ll be discussing here today. However, it’s important to note that a wide-range of businesses can make use of them as well, including:
- Sole-proprietors and LLCs
- Drop shippers
- eCommerce store owners
- Affiliate marketers
Basically, anyone who runs a business online that incurs expenses may be able to use these financing options.
Before applying for business financing it doesn’t hurt to prepare yourself. In fact it may actually help you during the application process. We recommend starting with the following:
- Make sure to have a solid, realistic business plan. You should know your market and have a 12-month projection for you business’ success (along with data to back it up).
- Decide how much you need and create a budget. Crunch the numbers to determine a loan amount, how you’ll use it, as well as how you’ll eventually pay it back.
- Be ready to provide current business details if applicable. This could include your current financial reports, inventory, website traffic data, etc. Anything to prove the long term solvency of your business.
So, with this information ready, where exactly can you look for capital for your online business? Below are eight legitimate and different options to consider for financing your WooCommerce store.
1. PayPal Working Capital Loan
First on our list is the PayPal Working Capital Loan. This will only work if you process most of your purchases through PayPal, as the income reported there is what is used to determine your eligibility for a loan in the first place.
This type of loan is really flexible as it’s intended to be used to cover short-term funding needs. So, if you want to expand your business by investing in a marketing push, working capital makes it easy to inject money into your business quickly. Another common use of these funds is to cover payroll gaps or if you need to purchase a new lot of inventory.
No credit check is required and you pay back the loan via automatic payments made out of your PayPal account. Specifically, a percentage of each sale is taken and applied to paying off the loan. This is super convenient, but the repayment amount is often way more than what you’d typically pay monthly on a loan, so keep that in mind.
2. PayPal Business Loan
Another PayPal option that could be good for WooCommerce store owners is the PayPal Business Loan Builder. This one is a much more traditional loan option and does require a credit check and all the usual application process. The process can mostly be completed online, however, which involves completing a form and a soft credit check. You’ll also need to submit four month’s worth of bank statements.
Expect a phone call from a rep to complete the application process. Once approved, funds will be deposited in your bank account within a couple of days. Its minimal fuss but interest rates are high. However, it is a quick way to inject money into your business when you need it.
Kabbage is another option for getting quick funding by opening a small business line of credit. They offer both secured and unsecured business loans with short and longer terms, working capital, revolving lines of credit, and inventory-specific loans.
This one is suitable for small businesses with funding starting as low as $1000. They do offer higher sums for larger companies as well. At this moment in time as of 2021, there’s a waitlist for funding but it’s definitely one to keep your eye on for your future business funding needs.
4. Upstart Loan
Another funding option is Upstart, which specializes in personal loans. These loans are unsecured, not backed by collateral, and are paid back over a fixed period. And yes, they are personal loans, but I’m including them on this list because they can be helpful for sole-proprietors who may wish to consolidate their personal debt or credit card debt before venturing into a new business.
OnDeck is another flexible financing option for small businesses that could be ideal if you’re looking to stock up on inventory, manage payroll, or invest in a large one-time purchase to expand your business. This lender offers two different forms of financing.
First up is the OnDeck Line of Credit, which offers small businesses a revolving credit line they can use whenever they want. Loan amounts range from $6,000 all the way up to $100,000, are bound by a 12-month repayment term, and reset each time you make a withdrawal.
The other option is the OnDeck Term Loan, which works for making larger investments. You can receive a one-time lump sum of money when you need it, in amounts ranging from $5,000 to $250,000, with an 18-month repayment term. The unique thing here is you can apply for more funding once you’re repaid half of your initial loan.
Or perhaps BlueVine is more in line with what you’re looking for? This lender offers business loans and lines of credit that would be workable for many small businesses. They do require that your company have at least $25,000/month in revenue, however, so this will definitely not work for smaller companies.
Even so, it’s a solid option to have on your radar should your eCommerce store grow to this size.
Fundbox is another valuable option to be aware of as they offer flexible small business loans. You can get a line of credit for up to $150,000 that you can pay back over 12 to 24 weeks. This is a good choice if you’ve just launched your business and you’re trying to manage expenses before your first bit of revenue comes in.
Your other option with this lender is term loan for up to $150,000 that you can back over 24-52 weeks. There’s no prepayment penalty or origination fee, either which are some nice bonuses.
Last on our list is Credibly, which offers small business loans and financing in amounts ranging up to $400,000. They offer working capital loans, a merchant cash advance, and business expansion loans, serving the full range of situations small businesses face.
Repayment periods range from six to twenty-four months across all the financing options and they are extremely well-rated by the Better Business Bureau (BBB).
Getting Financing Your WooCommerce Store is Simple
As you can see, there may be more financing options out there for small businesses that you initially thought. And that’s a fantastic thing, since it’s always nice to know there are funds on hand should the need ever arise.
Managing a WooCommerce store can be a stressful prospect, especially if you’re just starting out or you hit a slow month. In such times, knowing there are ways to carry your company over the hump is a level of reassurance we could all use from time to time.
We hope this guide helps!