Financing works a little differently for eBay sellers. Bank loans can be tough to come by, but you have a range of nontraditional financing to pick from that might actually work better for your business model.
This guide illustrates your options and helps you assess which kind of financing could fit your needs — or if you need a loan at all. We take you through the kinds of loans that are available for eBay sellers, what you need to apply and more.
How can I finance my eBay store?
Lucky for you, there are lots of financing options for small businesses like eBay stores. These include:
Merchant cash advances. Merchant cash advances like PayPal Working Capital can help seasoned sellers get ready for a busy season. They’ll deposit a cash advance directly into your account and then take a specific percentage of your sales. Some will charge interest — which can be high — while others ask for a fixed fee.
Microloans.These small-dollar loans are particularly useful to eBay sellers just getting off the ground and need a few hundred or thousand dollars to purchase a key piece of equipment or build up inventory.
SBA loans. SBA loans are government-guaranteed small business loans that offer low interest rates and longer repayment terms than most lenders. SmartBiz offers SBA loans and streamlines applications for faster funding.
Startup loans.Loans for new businesses could be particularly useful to eBay sellers that are new to the game. They tend to have less strict eligibility requirements and can come in smaller amounts and terms. Be prepared to submit a business plan.
Fixed-term business loans. These are more traditional Get a fixed-term business loan with predictable monthly payments business loans that are funded in one lump sum and repaid over a set period of time. They’re better suited for heavy weight sellers: You’ll usually need to have been in business for at least one year and have monthly revenue of $10,000 or more to qualify.
Crowdfunding. Got a small following? Or a social network? Set up a campaign on a crowdfunding platform and ask your friends and fans to make small contributions.
Friends and family. Borrowing from friends or relatives is a financing option that gives you a little more leeway than a professional lender will allow. Just make sure they know what they’re getting into so you don’t damage your relationship.
Yes. Some lenders offer loans tailored for online businesses like your eBay store, including:
Bitbond.Bitbond is a peer-to-peer platform that connects you with investors and provides resources to improve your eBay business. Its interest rates and fees tend to be low because it uses bitcoin to avoid transfer and exchange fees. A bonus: You don’t need a credit score or bank account to apply.
LendingClub. LendingClub is another peer-to-peer lender that provides a client adviser to help you navigate your options. You could get a loan within days, but your business must be at least two years old and you must own at least 20% of it.
Kabbage.Kabbage is a popular choice among eBay sellers who want a line of credit, rather than a traditional loan. But it’s best for established sellers with steady sales — missing a payment can lead to mounting fees and could ultimately hurt your business.
Dealstruck. Dealstruck offers inventory lines of credit and loans tailored for online retailers. You’ll have an easy time signing up to get decent interest rates.
What should I look for in an eBay loan?
When trying to find the right loan for your eBay store, rates and terms are important. But they’re not the only thing you should consider. Pay attention to these aspects when
Loan amounts. Do you need a bit of money to set up a website, or are you looking for a chunk of cash to finance your inventory? Narrow down your options by looking at loans that will give you just enough — and try not to borrow more than that. Otherwise you’ll have to pay more in interest.
Loan terms. Can you pay your loan back right away, or would you like something open-ended, like a line of credit? Find a lender that offers a repayment term that fits your budget.
Your eligibility. The vast majority of business lenders have minimum revenue requirements, which will usually be around $10,000 monthly or $100,000 annually. Some lenders require that you to own a specified percentage of your business, while others might not give you money if your business hasn’t been around for more than a year. Make sure you meet the lender’s requirements before choosing a loan.
Interest rates. Interest rates vary across lenders.The amount you want to borrow, your lender, loan term and type and even your credit score can factor into the rate you’re ultimately offered.
Fees . Read the fine print and know the costs when you apply for a loan — some come with hidden origination, application and prepayment fees.
Repayment costs. Avoid applying for a loan with repayments that you can’t afford — and make sure you’re clear on when they’re due before you sign your loan documents. Repayments can be monthly, weekly or even come out of your sales each day, depending on what type of financing you choose.
What do I need to apply?
The documentation you’ll need to assemble before applying for a loan will differ by lender and loan type — especially when it comes to loans for e-commerce businesses like eBay stores. Generally, you’ll need to have financial records for yourself or your business, a business plan and your personal information. You may also need to provide your personal credit score.
Three quick tips for smart financing
Understand the terms. So many eBay sellers run their businesses into the ground because they didn’t understand the terms of their loans. Unless you’re applying for an SBA loan, you won’t benefit from regulated terms — which can result in high hidden fees or interest rates. If something sounds too good to be true, it probably is.
Only borrow what you need. Taking out more than you need is a recipe for debt — remember, you’re paying interest on the full amount of your loan.
Don’t use a loan to make up for losses. It’s usually not a good idea to take out a loan when you’re already in the red. Defaulting on a loan can land you in a worse financial position.
Is a business loan the right choice for you?
When should you take out a loan?
When should you think twice?
When you’re doing well. Do you have a consistent record of sales and want to step up your marketing game? Taking out a loan could help you meet your needs with little risk, as you’re likely able to pay back your loans on time.
When you want to expand. If you don’t have the resources to meet high demand, a loan could be the extra boost your business needs to take it to the next level.
When you’re suffering losses. Think hard before taking out a loan when your business is losing money each month. There’s a chance you’ll fall behind on your payments, resulting in fees, penalties and even negative cash flow, if you’ve agreed to automatic daily repayments.
If you want to make a larger investment. If you take out a loan for your eBay store and aren’t able to make the payments as easily as you expected, you can easily damage your credit score.
Taking out a loan can be a solid way to boost your eBay presence and better compete in the e-commerce world. Comparing your options and choosing the financing that best fits your needs is the best way to ensure your long-term success.
Yes. You may be able to apply for a small business grant, though they can be hard to find. The federal government offer grants for women-owned and minority-run businesses, which might be worth a look. If you choose this route, you’ll need to put together a solid business plan before you apply.
If you find yourself unable to repay your existing loans, call your creditors immediately. Some loan providers may work with you on adjusted repayment plans.
But don’t write off secured business loans completely. Look into their benefits to see if they can meet your business needs.
It depends on your situation. Generally, it’s less risky when business owners who have taken a short break and are up to date on the trends of their particular selling niche take out a loan — they have a decent idea of what to expect. If you’ve been away from eBay for a while, you might want to wait a bit to get the feel for your sales before borrowing.
Keep in mind that your sales records can have an impact on your rates and chances of approval, so you might want to wait until you have at least a solid few months behind you to get financing.
Yes. The Securities and Exchange Commissions has been working to regulate online lenders to make sure both borrowers and lenders are protected. With that said, you might want to make sure your lender is properly licensed and do a quick search to make sure they haven’t had run-ins with regulatory bodies before. Customer reviews on sites like Trustpilot and the Better Business Bureau, while not always entirely reliable, can do a good job of raising red flags too.
Anna Serio is a trusted loans expert who's published more than 800 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Fundera, Business.com, and ValueWalk feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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