Compare business loans for eBay sellers

If you want to run a successful eBay business, you need to source products, manage your inventory, market your store and stay competitive. To do this, you’ll need access to capital. Although traditional bank loans may be tough to come by, there’s a range of nontraditional financing options to pick from that might actually work better for your business model. This guide explores the different types of financing options and business loans for eBay sellers and what you need to apply.

Ways to finance your eBay business

There are lots of financing and business loans for eBay sellers, including:

Business line of credit

If you always need money to maintain your inventory but don’t have consistent sales, consider opening a business line of credit. It works like a credit card as you can borrow, repay and borrow again up to a set limit.

• Borrow $5,000 to $1 million
• Pay 9% to 39.99% interest only on the amount you actually use

Peer-to-peer business loans

Rather than provide funding themselves, online peer-to-peer marketplaces help connect you with individual investors willing to take on your loan.

• Loan amounts range from $5,000 to $500,000
• Interest rates range from 4.96% - 24.93%
• Common terms are from 6 months to 5 years

Merchant cash advances

Merchant cash advances 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 daily or weekly sales.

• Pay a fixed fee (known as a factor rate) ranging from 1.1 to 1.5
• Receive funding within a few days
• Loan amounts range from $500 to $500,000

Microloans

These small-dollar loans are particularly useful to eBay sellers who are just getting off the ground and need a few hundred or thousand dollars to purchase a key piece of equipment or build up inventory.

• Loan amounts range from $500 to $50,000
• Interest rates range from 6.7% to 12%

Canada Small Business Financing Program (CSBFP) loan

A government-backed small business loan that offers low interest rates and long repayment terms. You can apply at your bank or financial institution, but you’ll need to meet the eligibility criteria.

• Borrow up to $1,150,000 (max $150,000 for lines of credit)
• Registration fee of 2% of the loan amount
• The maximum interest rate is the lender’s prime lending rate + 3% for term loans and the lender’s prime lending rate + 5% for lines of credit

Startup loans

Loans for new businesses could be particularly useful to eBay sellers who are new to the game. The eligibility requirements are typically less strict, but just be prepared to submit a detailed business plan.

• Terms typically range from six months to five years
• Borrow $500 to $1,000,000
• Interest rates start at around 13%

Fixed-term business loans

These are more traditional business loans that are funded in one lump sum and repaid over a set period of time with interest. You can get term loans from banks, credit unions and online lenders.

• Loan terms can range from 6 months to 20 years
• Choose from fixed or variable interest rates between 4% and 39.99%
• Lenders typically offer between $500 and $500,000, but you can find term loans up to $1 million

Personal loans

Personal loans may be the way to go if you have a small one-time business expense like expanding your storefront, buying new equipment or advertising.

• Loan amounts range from $100 to $50,000
• Typical term lengths range between 6 and 60 months
• You may be able to get a lower interest rate if you have good credit, but typical rates are between 6.99% and 35%

Crowdfunding

Got a small following? Or a social network? Set up a campaign on a crowdfunding platform like Kickstarter or GoFundMe and ask your friends and fans to make small contributions.

• Crowdfunding platforms typically charge a flat fee and a payment processing fee or transaction fee

How to compare eBay business loans

Consider the following factors when comparing business loans for eBay sellers:

• Loan amounts. Do you need some 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 over the course of a set time period, 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 $5,000 – $10,000 monthly or $100,000 annually. Some lenders require that you own a specified percentage of your business, while others might not give you money if your business hasn’t been around for at least six months to one 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, loan type and even your personal credit score can factor into the rate you’re ultimately offered.
• Fees. Read the fine print and know the business loan costs when you apply for a loan—some come with 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, bi-weekly or even come out of your sales each day, depending on what type of financing you choose.

What you’ll 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 the following:

• Personal identification
• A detailed business plan
• Business and personal tax returns
• Sales and financial history
• Business information (name, licence, business number)
• Bank account details

Is a business loan the right choice for you?

Can you get an eBay business loan with bad credit?

Yes, but it’ll be more difficult and expensive. You may have to pay higher interest rates or provide collateral, such as your inventory, but alternative lenders typically look at your business performance or business plan rather than your credit history.

Tips to become a successful eBay seller

If you want to become a successful eBay seller and increase your revenue, consider these tips:

• Write detailed, honest descriptions: Include dimensions, condition and flaws so buyers know exactly what they’re getting.
• Take high-quality photos: Use good lighting and different angles to showcase your product.
• Offer competitive pricing: See what your competitors are charging and consider offering lower prices or deals like free shipping.
• Use relevant keywords: Include keywords that buyers are likely to search for in your item titles and descriptions.
• Be responsive and polite: Answer buyer questions quickly and professionally to build trust and earn positive feedback.

Bottom line

Taking out a loan can be a solid way to boost your eBay presence and better compete in the e-commerce world. Comparing your business loan options and choosing the financing that best fits your needs is the best way to ensure the long-term success of your online business.

Frequently asked questions

• What happens if my business fails and I can't repay my loan?

  If you find yourself unable to repay your loan, call your creditors immediately. Some loan providers may work with you to create a new repayment plan. You can also contact a licensed insolvency trustee to discuss options like consumer proposals or bankruptcy. If that doesn't work and you default on your payments, your business and/or personal assets can be seized.

• Do small business loans require collateral?

  Some business loans do, but not all. If your business finances are strong, you could qualify for an unsecured business loan that doesn't require collateral.
  But don't write off secured business loans completely. They usually come with more competitive interest rates, but you run the risk of losing your collateral should you default on the loan. Look into the benefits to see if a secured business loan can meet your needs.

• Is it a good idea to take out a loan if I'm returning to eBay after a break?

  It depends on your situation. Generally, it's less risky to take out a loan when business owners are up to date on the trends of their particular selling niche, as they have a decent idea of what to expect. If you've been away from eBay for a while and feel out of touch with your selling niche, you may want to wait a bit to get the feel for your sales and customers before borrowing.
  Keep in mind that your sales records can have an impact on your rates, terms and chances of approval, so you might want to wait until you have at least a solid few months behind you to get financing.

• Can I apply for funding through eBay Seller Capital?

  No, this financing program is only available for sellers based in the United States.

To make sure you get accurate and helpful information, this guide has been edited by Leanne Escobal as part of our fact-checking process.

Written by

Rebecca Low

Writer

Rebecca Low is a writer for Finder. She has contributed to a range of digital publications, including income.ca, Indeed, and Expatden, writing on topics like personal finance, career development, and travel. See full bio

Co-written by

Anna Serio

Editor

Anna Serio was a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY. See full bio

Anna's expertise

Anna has written 58 Finder guides across topics including:

• Personal, business, student and car loans
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