Wednesday, February 24, 2021

Funding Your eCommerce Business: Platform Pros & Cons

Written by
Tim Chard

Running an eCommerce business can be one of the most fulfilling things you ever do; it can also be one of the most expensive.

Expenses like product manufacturing, storage, shipping, licenses and fees, software, marketing, and site hosting can add up quickly. 

This can be particularly challenging when you’re trying to start or scale a business and the revenue hasn’t quite caught up yet, and running out of cash is a contributing reason why 82% of businesses ultimately shutter their doors for good. 

This is why so many businesses need funding, and it’s why it’s so crucial to choose the right lender upfront. You want to get the funds that you need when you need it, and it shouldn’t have to cost you huge chunks of equity or come at an interest rate that you can’t afford to pay back.

In this post, we’re going to take a look at the four most common eCommerce lenders, diving into the pros and cons of each so you can determine which is best for you. 

The Questions to Ask Yourself Before Choosing a Lender 

While each business is different, these are typically the most important questions eCommerce businesses should ask themselves before choosing a financing option:

  • How quickly do I need the money? Some lenders will approve your application within a matter of days, and you can receive funding by EOD, next business day. Others may take a month or longer. 
  • How much money do I need? If you need 50k to get you through the first six months, you don’t want to accept the first offer of 20k that you get. It might stop the bleeding now, but it’s not enough long-term. 
  • Do I have a strong business financial history to show a lender or investor? Some types of loans or lines of credit are only extended to businesses with consistent financial histories.
    All lenders are different; some may require six months while others might require five years. Some, however, won’t require much of a history at all, which can help newer or slower-to-grow brands. 
  • What, exactly, am I looking to finance? Do you need to fund product manufacturing, marketing, or employee payroll?
    You’ll likely be asked about this on traditional loan applications and funding rounds. This is important to know so you can determine how much funding you need., too. 
  • Am I willing to pay interest or a fee, or would I prefer to give up equity? If you believe your business will be worth a high valuation down the road, equity may not be the best choice.
    Some businesses consider it, however, if they’d struggle to pay back financing with an interest or fee attached, especially during the early stages of unstable economic climates.
    Some are also willing to give up equity if they gain a partnership with the investor, who will be available for advice or to share resources like connections moving forward. 
  • Will I just need money once, or on an ongoing basis? Do you need seed funding to get started, so a one-time lump fee will work? Or are you interested in an arrangement that allows for ongoing funding on an as-needed basis?
    One-time loans can give you the lump sum, while lines of credit allow you to continually borrow and payback financing as needed. 

Why eCommerce-Specialized Lenders Instead of Other Loans? 

When you’re considering financing, there’s no one-size-fits-all solution. That being said, plenty of eCommerce businesses prefer to work with lenders that specialize in eCommerce financing instead of traditional business loans that they’d get from a local bank.

eCommerce loans may be granted faster than traditional loans, and depending on your business, at a lower interest rate or fee overall. And if you already have a business relationship with the lender, that can streamline the process, making it more convenient.

Let’s take a look at the four most popular eCommerce lenders and the pros and cons of each. 

1. Shopify Capital 

Shopify Capital offers merchant cash advances and short term loans to storeowners in select states. (You can see the full list of states here.) 

Shopify will automatically offer qualifying businesses funding options. These offers are available for 30 days after they’re made. If accepted, a lump sum is deposited in your account, and then a small percentage of daily sales will go to repay the loan. 

You can view any funding offers by looking at your store’s settings and then viewing “Capitol.” Funding offers may be between $200 to $1,000,000 USD or $200 to $500,000 CAD. 


  • It can be convenient for Shopify owners who meet the criteria
  • There’s no application process; if you see the offer, it’s ready for you
  • The 12-month repayment term allows for more flexibility and breathing room than other lenders’ repayment terms 
  • Some merchants can secure additional funding if they grow quickly and qualify 


  • There’s a limited range for who can receive funding; either you’re offered funding or you aren’t, there’s no way to apply
  • If you hit a slow season and you’re low on sales, your account will be debited the remaining balance 
  • The borrowing cost depends on the specific offer; it may be higher for newer or more volatile businesses, which can make it more costly 
  • The funding may take longer to receive than some other options; eligible account owners are prequalified, but they still need to have the offer reviewed and it might take from 2-5 business days to receive the funds 

2. Clearbanc

Clearbanc is the self-proclaimed largest eCommerce investor worldwide, boasting no fixed payment timelines. 

They’ll provide funding between $10,000 to 10,000,000 USD for qualifying businesses, and you can receive access to the capital in 3 days or less. The request will be granted with a VISA or through their VendorPay platform. 

Instead of interest rates, they’ll charge a flat fee on the total amount financed, which will range from 6-12% depending on how the funds are spent. 

In order to qualify, you must:

  • Have an average monthly revenue of at least $10,000
  • Have at least six months of a consistent revenue history 
  • Be incorporated in North America or the United Kingdom
  • Be a corporation or a limited liability company 


  • There is no personal credit check, so your credit isn’t impacted and if you have a lower credit score this won’t affect your potential to get financed here
  • There’s quick deployment, so you can get the funds quickly
  • You can receive additional funding as you grow, even if you haven’t paid off the initial amount
  • You can receive different offers, allowing you to choose what works for you 


  • The flat fee that you’ll pay is a percentage of the funding you accept, and it can be on the higher side depending on how you spend it. The average interest rate for traditional business loans is around 3-7%, so this is a jump, though the longer repayment terms may be worth it to some 
  • They have more strict requirements for acceptance than some other eCommerce lenders, as consistent 10K months is a high barrier of entry for new businesses 

3. Brex Capital 

Brex Capital is distributed through a corporate card instead of a flat loan or a lump sum. It can be used at merchants across 200 countries where Visa and Mastercard are accepted. 

Since it’s a corporate card, this means that it’s a revolving line of credit. You’re able to use the funding when you need it on an ongoing basis, and then you pay it back. Then, as needed, you can draw from it again.

This is a great option for businesses who need short-term funds on a regular basis while waiting for sales to come in. 

Here’s who can qualify:

  • LLC, S-corp, C-corp, and LLP companies who have EIN numbers in the United States
  • Businesses who are involved in prohibited activities, which include gambling, weapons, and more that you can see here 


  • There are no annual fees, no foreign transaction fees, and no interest if the corporate card’s balance is paid off within 30 days
  • Every transaction gives reward points
  • There’s a fast application process, which does not impact your personal credit score 
  • You can use the corporate card to build your business’s credit score, which can be used to secure more funding down the line 
  • There’s a great receipt tracking feature to make business expense tracking simpler, which is an asset come tax season 

-does not impact personal credit score 


  • Brex’s corporate cards don’t give you the option to carry a balance as it must be repaid every month; this is the biggest disadvantage, as there isn’t much flexibility for businesses who are scaling and need funding to get started for several months with longer repayment terms
  • Businesses outside the US do not qualify 

4. Stripe Capital 

Stripe Capital is more like a traditional loan than other options on this list. If you receive an offer for funding and accept, you’ll receive a lump sum. You’ll repay this loan and a flat loan fee through a percentage of each sale until it’s repaid in full. 

Eligible US businesses who have at least 12 months of processing history on Stripe can receive an email if they have an offer available. Like Shopify Capital, offers that you receive are available for 30 days and they can be granted automatically. Unlike Shopify, however, you can express interest in receiving funding . You can apply here.   


  • Unlike Shopify, you have the option to express interest in funding if it isn’t automatically granted
  • There’s no interest that adds up, just a single flat flee that doesn’t change
  • They typically grant three different offer amounts for you to choose from
  • It does not require a personal or business credit check
  • After approval, you can receive funds in 1-2 days
  • Having the funds come out of sales can benefit you. 


  • Available financing is based entirely on your Stripe transaction history, so if there is no history, funding is not an option
  • There’s a minimum payment required, which can hurt if you hit a slow season within a 60-day period, as prepayment doesn’t offset what you owe in the next period until the loan term is up 

Final Thoughts 

There are plenty of financing options available for eCommerce businesses who are looking for funding to grow their businesses. It’s important to find a lender who offers financing that aligns with your needs. 

While every business truly is different, the following base guidelines can be helpful:

  • Shopify is best for Shopify customers who prequalify already and who have consistent sales seasons throughout the year 
  • Clearblanc is great for businesses who are looking for more flexible repayment terms 
  • Brex is a good option for customers who need short-term funding that’s repaid monthly in full while they wait for sales or invoices to be paid
  • Stripe is best for existing Stripe customers with at least 12 months of history who are looking for longer repayment terms 

Looking for additional help managing your eCommerce business? Get in touch with us here

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