An eCommerce business is a business at the end of the day. As such, getting a business loan as an eBay seller isn’t only possible, but it’s a great way to transform it into an eBay business.
With the advent of the Internet, we saw a gigantic change in our daily lives. We don’t need to mail physical, handwritten letters thanks to e-mail, and we can order anything and have it without leaving our homes.
But our ease of life wasn’t the only thing that changed thanks to the Internet. Long are the days that you need a brick-and-mortar small business. You can be a small business owner from the comfort of your home, in front of your computer. In fact, eCommerce businesses continue to be in an uptrend. In 2020, in the European Union alone, it grew 10% from 2019, with a predicted worldwide growth of $5.4 trillion by 2026.
This fact means that eCommerce is here to stay and will continue to be a part of our daily lives. As such, eBay businesses must be considered a business, and as a business owner, you must treat it as such. Getting a business loan as an eBay seller is not only possible, but it’s a viable solution to transform your eBay store into an eBay business and take it to new heights.
In this article, you’ll learn:
When you finish reading this article, you’ll no longer consider yourself an eBay seller, you’ll be ready to acknowledge yourself as a small business owner, and you’ll be ready to take your eBay business to new heights.
Should You Get a Loan as an eBay Seller:
As a business owner, the decision to acquire capital should not be taken lightly. Business funding carries with it added responsibility for your small business, and you must take into account how the repayment terms and monthly payments will affect the cash flow of your eBay business.
If you’re suffering a slow period of sales, you should consider other options to scale. Adding a loan’s monthly payment to your already stretched cash flow could put your business finances under stress. If it happens you start missing loan payments, you could see lenders penalize you and charge hidden fees you didn’t account for.
Here are a few tips to help you understand what’s the best time to get business funding as an eBay seller:
- When your eBay store is doing well: If you have a consistent sales record and want to be proactive in your eCommerce business, acquiring business funding could be a good option. But as any good entrepreneur, you must acknowledge what will change for your small business.
- When you’re considering expanding: If you’re facing a period of high demand and you can’t keep up with all of it, a business loan can help you keep up and expand. It might allow you to hire additional staff or increase your inventory to satisfy your clients’ orders.
- When you have a clear-cut plan: Failing to plan is planning to fail. If you don’t plan for business funding, there’s a high chance your eBay business will suffer. But if you have everything written down to a tee of what the loan will bring for your business, you’ll most likely succeed.
- You want to improve your marketing: There are many eBay stores, but what separates an eBay seller from an eBay business is the decision to take it seriously. Marketing is essential for eCommerce businesses to expand, and investing in a marketing campaign will bear fruits.
- When you know you can make the loan payments: All of those steps won’t matter if you can’t plan to pay back the loan. It’s a good idea to keep a lump sum of cash in your business bank account to pay back the loan for at least six months.
Types of Business Loans You Can Get as an eBay Seller:
Business loans aren’t the same as personal loans. As a business owner, you must take into account the state of your small business, and which lender and loan type will better suit your eBay business at that moment.
Here you’ll get to know a few financing options, lenders, and more to see what’s the best loan option for your eBay store:
Working Capital Loans:
If you find yourself needing capital to pay your everyday expenses, then a working capital loan could be a great way to cover up short-term needs. It allows you to resupply inventory or pay staff if you employ them in your eBay business.
While the costs of an eCommerce business can be reduced — due to being an online business — there are still costs involved when it comes to it. A working capital loan is a great small business loan choice because if your eBay business relies heavily on seasonality — having periods of high sales and periods of little to no sales — it allows you to cover expenses during the slow periods.
Since working capital loans are normally a more modest amount of money, the repayment terms are considerably smoother, as well as the interest rates. But you have to take into account your credit score because the higher it is, the better the loan terms will be.
Term Business Loans:
Term business loans are similar to working capital loans in the way they function. You receive a lump sum of cash upfront and pay back the loan on the agreed schedule with a fixed repayment value. The big difference is that term business loans are normally a much higher amount than working capital loans and are normally used for more ambitious endeavors.
If you’re looking to expand your eBay business and take it to new heights and challenges, then a term loan is a great choice because you’ll have a significant injection of capital. Depending on the lender, it can be up to $500,000 or more depending on your small business situation, credit score, annual cash flow, the loan amount you require, and your small business’s eligibility.
This is not the best option for a new business as it carries heavy repayment terms and origination fees that most new businesses or startups can’t comply with. Also, your credit history and annual bank statements need to be presented to the lender and might require a cash advance as well.
SBA 7 Loans:
Considering an SBA 7 loan as an eBay seller is a very viable option. The Small Business Administration is an establishment focused on providing funding with good terms for small businesses. If your eBay store classifies as a small business, you can apply for an SBA loan.
SBA 7 loans are great if you’re looking to expand your eBay business, and you can afford to wait some time to get the loan amount. SBA loans are famously very time-consuming with a long application process. Depending on how they deem your business and taking into account your credit score, you can get a significant injection of capital and repayment terms up to 25 years, with an interest rate of 6%- 9%.
If you’re considering investing in your business over time, then an SBA 7 loan could be a great option. But you need to think seriously about this type of loan. It can take up to 90 days to get approved for one. They also prefer already established businesses with a stellar performance to loan higher amounts.
Business Line of Credit:
A business line of credit is one of the best options you can get as an eBay seller to meet your business needs. A business line of credit allows you to get a lump sum of cash — normally up to $250.000 — on your business bank account fast, sometimes on the same business day that you applied.
The application process is not very strict as with other types of loans, and you only pay back the amount of what you end up using. So, if you only spend a quarter of the loan amount, you only pay interest on that quarter. Think of it as a business credit card, and it works similarly to one.
But, unlike credit cards, the interest rates can be quite high as it is an unsecured loan option with no collateral. If you do not research what’s the best lender for this type of loan, you can have an interest rate starting at 10%, which can go much higher, with weekly repayments.
Online loans are one of the favorite financing options for many small businesses, and according to the Biz2Credit small business lending index, it makes up 27.2% of all loans. Unlike other financial institutions, this type of loan is significantly faster, and private online lenders can work with you on the repayment terms to better suit your small business.
One of the famous disadvantages that online lenders tend to have is somewhat higher interest rates than other financial institutions, starting at around 7%. But considering that the repayment terms will suit your small business, this makes little to no impact on your loan payments.
In the case of Biz2Credit, you’ll have a variety of loan types available for your eBay business, starting at a 7.99% interest rate. Get in touch with us with as little as 4 minutes of your time, and hear back from us within 24 hours. If all goes well, you’ll get the capital on your business bank account within 72 hours and you can start making headway in the expansion of your eBay business!
How to Improve Your Chances of Getting an Ecommerce Business Loan:
If you’re no longer an eBay seller but an eBay business and ready to take your small business to new heights, you must know that getting a business loan is not the same as getting a personal loan.
There are certain steps you need to take to apply for a small business loan, and there are also a few tips you can use to improve your chances of getting approved for a financing option.
Let’s look at what you must take into account when applying for a business loan:
- Business and Personal Financial Records: Although your personal financial statements aren’t required, it helps loan providers evaluate your eligibility. Statements like your personal credit score, debts, and personal bank statements can help them decide. But what you need is your business’s financial statements on point, annual cash flow, monthly revenue, expenses, and everything else related to the financial side of your eCommerce business.
- Have a Very Detailed Business Plan: Lenders will always ask you for a business plan, but this step is seriously overlooked as many small business owners opt for writing a very basic one. Improving your business plan and having every objective clear-cut and easy to understand will separate you from everyone else. If you want to learn how to write a business plan, read this article.
- Have a Repayment Plan: Take some time to look at your business’s cash flow and think of a repayment plan. Also, take some time to prepare a little cash buffer to repay if everything goes wrong. If you tell lenders you have six months’ worth of cash to pay back on your bank account, they will be very impressed.
- Improve Your Credit Score: This is what a lender wants to know the most. Take some time to build up a solid credit score and — together with the steps above — you’ll have a better chance of getting funding than most people. Read this article and learn how to improve your credit score.
- Wait or Get Help: It might seem like a simple step but is an essential one. If you can spend some weeks or months reviewing the state of your small business and researching lenders, you can avoid some high-interest rate loan options or even predatory fees. You can also hire a business loan expert to help you figure out and apply for the best possible loan for your eBay business.
eBay Sellers Can Get Any Funding They Need With Biz2Credit:
Biz2Credit has helped many small business owners in times of need and helped them thrive with their small businesses. Here you won’t find any predatory fees or anything to take advantage of your small business situation. In fact, Biz2Credit is elected one of the best online lenders available!
If you’re finally ready to take your eBay business to new heights, reach out to our team and get to know the best funding option available for your small business!