Having the right financing partner for your busy season can heavily impact the growth that your business experiences. Using a reliable and affordable financing instrument like Loop’s eCommerce Line of Credit can supercharge your growth by making sure you’re not leaving any money on the table. Below are some insights on how the right financing can make or break your holiday season.
If you haven’t read Part one, you can find it here.
One of the best methods of financing inventory purchase orders is to use a line of credit made especially for eCommerce stores like yours.
An eCommerce line of credit is typically issued by an institution that specializes in eCommerce businesses and so they have a deep understanding of how eCommerce businesses are operated. Because this type of financing is so specialized, it typically means they have industry-low interest rates which adds to the benefits they provide.
There are other options for financing than an eCommerce line of credit, but they all come with heavy disadvantages:
You could approach a bank for a regular line of credit, but the bank relies on years of outdated sales data, which will limit the amount you can borrow from them even if you’re growing fast. In addition to a smaller line of credit than what you deserve, banks can also take up to 3 months to close a deal and issue funding to you.
You could approach merchant cash advance companies but this type of financing always comes at a heavy cost. Cash advance companies issue an amount of money to you at a fixed fee which will be paid back through a percentage of your daily/weekly sales. The catch is that if you’re a high growth eCommerce business, your revenue is growing very quickly, and the cash advance that was supposed to be paid in full over a year is actually paid off in the first 3 months. The interest rate you thought you were getting over a year, is actually the interest rate you got over 3 months – causing your cost of capital to skyrocket. This would be the equivalent of accepting a loan at 6% yearly interest rate which you all of a sudden are forced to pay off in 3 months – interest rate included.
eCommerce lines of credit are typically your best option with low-interest rates due to the specialized nature of the financing, as well as an online-first application process that means you could be approved and receive your funds in a matter of days.
Here’s the problem though, eCommerce lines of credit are commonplace everywhere but Canada. As a Canadian eCommerce business, you only have one place where you could obtain a true eCommerce line of credit, and that’s Loop For eCommerce.
As Canada’s only provider of an eCommerce line of credit, Loop is not only a financial leader in the country’s financial technology space, but it also provides an affordable and secure way to finance your inventory for the avalanche of orders you’ll receive this holiday season. Get your line of credit today by heading over to getloop.ca and filling out an application for a specialized eCommerce line of credit to help you capitalize on all the opportunities that Q4 has to offer.