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5 Reasons Why Your eCommerce Company Needs Revenue-Based Financing

5 Reasons Why Your eCommerce Company Needs Revenue-Based Financing

Wednesday 1st September, 2021

Do you run an online store that sells physical merchandise? Do you need to quickly grow your business? If you do, then you need financing and specifically what’s known as revenue-based financing. Here are five basic reasons why your eCommerce business should use revenue-based financing, along with what to consider and how we can help you.

WHY YOUR E-COMMERCE STORE NEEDS FINANCING

As an e-commerce business owner, consider that your online store will need to get ahold of more capital at one time or another. For example, it could be for promoting a new line of products. Another common reason for accessing additional financing is for being able to manage seasonal demands. When this occurs, it’s important to find the best e-commerce funding that’s suited for your business so that it can succeed.

WHAT IS REVENUE-BASED FINANCING?

Most likely, you’ve probably heard of revenue-based financing but may not understand what it is. Put simply, this is a fast, simple method for getting funding for a business. Also referred to as royalty-based financing or RBF, revenue-based financing is a way to raise capital where investors agree to give capital to a business. In exchange for their funding, an investor receives a specific percentage of the total gross revenues of the company. This is an alternative investment option to more traditional equity-based investments.

1. EASIER APPLICATION PROCESS

Unlike filing for a traditional bank loan, you don’t have to fill out lengthy forms, involving numerous pages. The application process is much simpler as there’s only one page to complete. About the only other information that’s needed is bank statements from your business’s past three months, along with statements from merchant services.

2. MINIMAL CREDIT REQUIREMENTS

One of the main perks of revenue-based financing is that there isn’t a lot of credit requirements. As a result, as a business owner, you’re able to get the needed funding even if you don’t have the best credit score. Thus, you can have the funding needed for your business to grow.

3. NO COLLATERAL REQUIREMENT

Another reason to use revenue-based financing is because you don’t need any collateral, which is not the case when applying for a traditional business loan. Even though the rates are somewhat higher than those of conventional bank rates, not having a collateral requirement can be a significant plus for many eCommerce business owners.

4. RETAINING COMPANY OWNERSHIP

A huge benefit of this type of financing is that, unlike traditional financing, you get to retain ownership and control of your company. What’s more, investors don’t sit on boards as well as put burdensome financial covenants on a business. Thus, as the founder of your company, you get to retain full control and management over your business in fulfilling its vision.

5. SPEEDIER ACCESS TO FUNDS

Consider that once your application has been submitted, you can receive the funding as soon as a week to 10 days. This makes this type of business financing exceptionally fast, besides convenient.

OTHER CONSIDERATIONS

THE BOTTOM LINE

Questions? Contact us. We make sure your company can receive all the capital that’s needed for growing and expanding your business.

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