The e-commerce market has been turbocharged in recent years, first by the global pandemic and the associated shutdowns, and then by the rise of disruptive platforms such as TikTok Shop and Temu.
The user-friendly interfaces of platforms like Shopify and eBay have also lowered the barriers to entry, while the data-intensive algorithms of Meta and Google ads are making it easier than ever for e-commerce stores to reach their ideal customer.
However, if you’re not cash-rich, raising the capital to stock and grow your e-commerce store can be challenging.
Besides a straightforward business loan, how else can you fund your e-commerce business
1. Revenue-based e-commerce financing
Revenue-based e-commerce financing offers an equity-free fixed-price capital investment that allows online businesses to quickly access funds in exchange for a portion of future sales.
Unlike traditional business loans, revenue-based e-commerce financing does not require a personal guarantee, has no impact on your company’s credit score, and involves no interest.
Repayments are made as a percentage of revenue, so they are lower during slower periods and higher when the business thrives, shortening the repayment period.
Lenders typically bypass credit score assessments and focus on key integrations with platforms like Stripe, Shopify, Facebook, and accounting software such as Xero or QuickBooks.
While some lenders may encourage using funds for specific purposes like marketing or inventory, e-commerce funding is generally non-restrictive.
One example of a UK-based provider of revenue-based financing is 365 Finance.
Key features:
-
- Suitable for e-commerce businesses with unpaid invoices.
- Allows easy access to cash (often within 24 hours) without the risk of debt.
-
- Interest is only paid on the credit being used.
- Interest rates on lines of credit are typically low.
- Faster to secure than a business loan.
- Lines of credit can be used for multiple purposes.
5. Invoice factoring
E-commerce sellers on large platforms such as Amazon often face slow payouts (30-60+ days), restricting access to cash for staff, inventory, and investment.
Invoice factoring bridges this gap, providing immediate access to a portion (typically up to 90%) of your invoice value, with the remaining balance paid upon platform settlement. While limits exist initially, they often increase as your business scales.
Some key lenders operating in this area include Kriya, MetroBank and RBS, amongst others.
Key features:
-
- Suitable for e-commerce businesses with unpaid invoices.
- Allows easy access to cash (often within 24 hours) without the risk of debt.
-
- Allows suppliers to be paid upfront, improving liquidity and enabling negotiation for more favourable terms.
- No collateral required, with the purchase order itself serving as security.
- PO financing is typically best-suited to businesses where large orders are common and require significant upfront investment.
4. Business lines of credit
Often referred to as alternative overdrafts or revolving credit, lines of credit provide you with funds that you can access (or draw down) as needed, and are particularly popular with e-commerce businesses.
You receive a fixed credit limit based on your turnover, with amounts ranging from as small as £2,000 to as large as £1,000,000.
Unsecured business lines of credit may be available to e-commerce businesses with a robust trading history, as well as a good business credit score.
Some line of credit providers include SafetyNet, Tappily, Paragon Bank, Just Cashflow, and 365 Business Finance.
SafetyNet provides up to £1,000 credit, suitable for smaller ventures, while Paragon Bank provides secured revolving credit facilities up to £35m for large, established organisations.
Key features:
-
- Interest is only paid on the credit being used.
- Interest rates on lines of credit are typically low.
- Faster to secure than a business loan.
- Lines of credit can be used for multiple purposes.
5. Invoice factoring
E-commerce sellers on large platforms such as Amazon often face slow payouts (30-60+ days), restricting access to cash for staff, inventory, and investment.
Invoice factoring bridges this gap, providing immediate access to a portion (typically up to 90%) of your invoice value, with the remaining balance paid upon platform settlement. While limits exist initially, they often increase as your business scales.
Some key lenders operating in this area include Kriya, MetroBank and RBS, amongst others.
Key features:
-
- Suitable for e-commerce businesses with unpaid invoices.
- Allows easy access to cash (often within 24 hours) without the risk of debt.
-
- No collateral required.
- Repayments are made as a percentage of revenue.
- Faster funding compared to traditional loans.
3. Inventory purchase-order (PO) financing
This type of financing provides an advance to a supplier, secured against a confirmed purchase order, alleviating some of the financial strain of fulfilling orders—particularly large ones—by financing the transaction until an invoice is raised.
Inventory loans of this kind are well-suited for e-commerce businesses needing to prepare and stockpile inventory for busy seasons like Black Friday and Christmas, or cash-strapped businesses needing to secure cash upfront to keep up with customer demand.
One alternative lender operating in this area is Juni, a financial platform for digital commerce, which recently expanded its product lineup with “inventory financing”.
Juni’s solution offers customers extended repayment terms of up to 120 days with fixed monthly fees as low as 3%, enhancing liquidity, cash flow forecasting, and margins on larger inventory orders from European, Chinese, and American suppliers.
The key difference between purchase order (PO) financing and invoice financing is that with PO financing, you receive funding before the delivery of goods, allowing you to pay suppliers in advance. In contrast, invoice financing requires the goods to be delivered first, and funding is provided based on the invoice issued after delivery.
Key features:
-
- Allows suppliers to be paid upfront, improving liquidity and enabling negotiation for more favourable terms.
- No collateral required, with the purchase order itself serving as security.
- PO financing is typically best-suited to businesses where large orders are common and require significant upfront investment.
4. Business lines of credit
Often referred to as alternative overdrafts or revolving credit, lines of credit provide you with funds that you can access (or draw down) as needed, and are particularly popular with e-commerce businesses.
You receive a fixed credit limit based on your turnover, with amounts ranging from as small as £2,000 to as large as £1,000,000.
Unsecured business lines of credit may be available to e-commerce businesses with a robust trading history, as well as a good business credit score.
Some line of credit providers include SafetyNet, Tappily, Paragon Bank, Just Cashflow, and 365 Business Finance.
SafetyNet provides up to £1,000 credit, suitable for smaller ventures, while Paragon Bank provides secured revolving credit facilities up to £35m for large, established organisations.
Key features:
-
- Interest is only paid on the credit being used.
- Interest rates on lines of credit are typically low.
- Faster to secure than a business loan.
- Lines of credit can be used for multiple purposes.
5. Invoice factoring
E-commerce sellers on large platforms such as Amazon often face slow payouts (30-60+ days), restricting access to cash for staff, inventory, and investment.
Invoice factoring bridges this gap, providing immediate access to a portion (typically up to 90%) of your invoice value, with the remaining balance paid upon platform settlement. While limits exist initially, they often increase as your business scales.
Some key lenders operating in this area include Kriya, MetroBank and RBS, amongst others.
Key features:
-
- Suitable for e-commerce businesses with unpaid invoices.
- Allows easy access to cash (often within 24 hours) without the risk of debt.
-
- No personal guarantee required.
- No impact on your company’s credit score.
- No interest involved.
- Repayments are made as a percentage of revenue.
- E-commerce financing can be used for multiple purposes.
2. Merchant cash advance (MCA)
One type of revenue-based financing option is a merchant cash advance (MCA).
An MCA is an alternative financing method to traditional small business loans. With an MCA, lenders provide e-commerce businesses with an upfront sum of money based on a percentage of their anticipated future sales. The business then repays the advance plus fees over a set period, typically through a percentage of their daily or weekly debit and credit card transactions.
Some notable UK-based providers of MCAs include 365 Finance, Capify, LiberisFinance, and Merchant Loan Advance.
Key features:
-
- No collateral required.
- Repayments are made as a percentage of revenue.
- Faster funding compared to traditional loans.
3. Inventory purchase-order (PO) financing
This type of financing provides an advance to a supplier, secured against a confirmed purchase order, alleviating some of the financial strain of fulfilling orders—particularly large ones—by financing the transaction until an invoice is raised.
Inventory loans of this kind are well-suited for e-commerce businesses needing to prepare and stockpile inventory for busy seasons like Black Friday and Christmas, or cash-strapped businesses needing to secure cash upfront to keep up with customer demand.
One alternative lender operating in this area is Juni, a financial platform for digital commerce, which recently expanded its product lineup with “inventory financing”.
Juni’s solution offers customers extended repayment terms of up to 120 days with fixed monthly fees as low as 3%, enhancing liquidity, cash flow forecasting, and margins on larger inventory orders from European, Chinese, and American suppliers.
The key difference between purchase order (PO) financing and invoice financing is that with PO financing, you receive funding before the delivery of goods, allowing you to pay suppliers in advance. In contrast, invoice financing requires the goods to be delivered first, and funding is provided based on the invoice issued after delivery.
Key features:
-
- Allows suppliers to be paid upfront, improving liquidity and enabling negotiation for more favourable terms.
- No collateral required, with the purchase order itself serving as security.
- PO financing is typically best-suited to businesses where large orders are common and require significant upfront investment.
4. Business lines of credit
Often referred to as alternative overdrafts or revolving credit, lines of credit provide you with funds that you can access (or draw down) as needed, and are particularly popular with e-commerce businesses.
You receive a fixed credit limit based on your turnover, with amounts ranging from as small as £2,000 to as large as £1,000,000.
Unsecured business lines of credit may be available to e-commerce businesses with a robust trading history, as well as a good business credit score.
Some line of credit providers include SafetyNet, Tappily, Paragon Bank, Just Cashflow, and 365 Business Finance.
SafetyNet provides up to £1,000 credit, suitable for smaller ventures, while Paragon Bank provides secured revolving credit facilities up to £35m for large, established organisations.
Key features:
-
- Interest is only paid on the credit being used.
- Interest rates on lines of credit are typically low.
- Faster to secure than a business loan.
- Lines of credit can be used for multiple purposes.
5. Invoice factoring
E-commerce sellers on large platforms such as Amazon often face slow payouts (30-60+ days), restricting access to cash for staff, inventory, and investment.
Invoice factoring bridges this gap, providing immediate access to a portion (typically up to 90%) of your invoice value, with the remaining balance paid upon platform settlement. While limits exist initially, they often increase as your business scales.
Some key lenders operating in this area include Kriya, MetroBank and RBS, amongst others.
Key features:
-
- Suitable for e-commerce businesses with unpaid invoices.
- Allows easy access to cash (often within 24 hours) without the risk of debt.