- Understand Your Needs: Calculate how much funding you need based on sales trends, inventory costs, and cash flow.
- Explore Financing Types:
- Bank Loans: Fixed payments, requires strong credit and a lengthy approval process.
- Sales-Based Financing: Flexible repayments tied to sales, quick approval, no credit checks.
- PO Financing: Helps fulfill large orders by paying suppliers directly but comes with higher costs.
- Check Lender Requirements: Ensure you meet criteria like sales history, platform compatibility, and business structure.
- Compare Costs: Review repayment terms, fees, and how financing impacts cash flow.
- Plan for Growth: Choose financing that scales with your business and supports long-term goals.
Quick Comparison
| Financing Type | Repayment Structure | Approval Time | Best For |
|---|---|---|---|
| Bank Loans | Fixed monthly payments | Slow | Businesses with steady revenue |
| Sales-Based Financing | Percentage of sales | Fast | Seasonal or fluctuating income businesses |
| PO Financing | Payment after order delivery | Moderate | Handling large, one-time orders |
Choose the financing option that fits your needs, matches your sales cycles, and supports your growth.
Step 1: Define Your Business Funding Needs
Calculate the Amount You Need
Figure out your inventory financing gap by considering stock requirements, seasonal trends, and supplier payment terms. Break it down by analyzing your current inventory, expected sales, seasonal demand, and supplier timelines to pinpoint the amount you’ll need.
Analyze Cash Flow and Sales History
Dig into your cash flow patterns and sales data to decide on the right financing amount. This ensures you can handle repayments without disrupting your day-to-day operations.
"We evaluate your sales history, cash flow needs, and debt positions to make you an offer that fits with your cash flow capability. We structure your financing to ensure you're not putting your business at risk with too much debt."
– Onramp Funds
Use this table to project cash flow and better understand your financial situation:
| Time Period | Expected Sales | Inventory Costs | Operating Expenses | Available Cash |
|---|---|---|---|---|
| Q2 2025 | Projected | Needed Stock | Fixed + Variable | Net Position |
| Q3 2025 | Peak Season | Holiday Stock | Increased Costs | Net Position |
| Q4 2025 | Holiday Rush | Spring Stock | Marketing Spend | Net Position |
With this clarity, you can time your financing to match peak business periods.
Plan Your Funding Timeline
Coordinate your funding schedule with supplier lead times, seasonal needs, and marketing plans to make the most of your investment while keeping cash flow steady. Modern financing options often offer repayment schedules that adjust based on your sales, easing the burden during slower months.
Allocate funds to key areas like:
- Inventory purchases
- Shipping and logistics
- Marketing campaigns
- Operational upgrades
This strategy not only addresses immediate needs but also sets the stage for future growth.
Step 2: Review Financing Types
Bank Loans
Bank loans come with fixed monthly payments, making budgeting easier. However, they require a lot of paperwork, a solid track record, and strong personal credit. Collateral or personal guarantees are often necessary. The approval process can be lengthy, which may not suit fast-growing eCommerce sellers needing quick access to funds.
Sales-Based Financing
Sales-based financing ties repayments to your actual sales, providing flexibility during slower periods.
Onramp Funds is a great example of this model. Their platform offers features tailored to eCommerce sellers:
| Feature | Benefit |
|---|---|
| 24-hour Funding | Fast access to capital for inventory purchases |
| Platform Integration | Compatible with platforms like Amazon, Shopify, and Walmart |
| Flexible Payments | Payments adjust based on sales performance |
| No Credit Checks | Approval depends on store performance, not personal credit |
"Onramp's straightforward process secured funds within a day of final approval." – Adam B., The Full Spectrum Company
PO Financing
Purchase Order (PO) financing is designed for businesses needing to fulfill large orders but lacking the upfront capital. Here, the financing company pays suppliers directly, ensuring you can get the inventory you need. While it’s more expensive than a bank loan, PO financing allows you to take on bigger orders without giving up equity.
When choosing a financing option, think about your business model, sales trends, and immediate needs. Sales-based financing often works well for businesses with seasonal sales, while bank loans might suit companies with steady revenue. Up next, we’ll dive into how to evaluate lender qualifications.
How Inventory Financing Can Help Your Business Grow
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Step 3: Check Lender Qualifications
Once you've explored financing options, it's time to ensure the lender aligns with your business needs.
Sales and Credit Requirements
Every lender has its own set of criteria, so make sure your business qualifies.
For traditional bank loans, common requirements include:
- A credit score of 680 or higher
- At least 2 years in business
- Detailed financial statements
- Collateral or personal guarantees
Revenue-based financing is generally more lenient. For instance, Onramp Funds requires the following:
| Requirement | Minimum Threshold |
|---|---|
| Avg. Monthly Sales | $3,000 |
| Business Structure | Legal U.S. entity |
| Time in Business | No minimum |
| Personal Credit | Not required |
| Platform Sales | Verified store data |
"Onramp has simplified cash flow by automating everything: easy to request, set it and forget it payments - quick and fast!" - Torrie V., Founder and Owner of Torrie's Natural
After confirming your business meets the lender's requirements, check if their system integrates with your eCommerce platform.
eCommerce Platform Support
To make funding and performance tracking seamless, your lender should support your eCommerce platform.
What to Look For:
- Compatibility with your platform
- Integration setup requirements
- Options for managing multiple stores
- Strong data security protocols
As mentioned earlier, ensure the lender works with platforms like Amazon, Shopify, or Walmart Marketplace. Many modern lenders will request secure, read-only access to your store data. This allows them to assess your performance and offer funding quickly - much faster than traditional methods.
"Onramp offered the perfect solution with revenue-based financing to secure the capital we needed to invest in inventory and pay it back at a reasonable time frame once we made sales. The process was quick, easy, and the support was great." - Jeremy, Founder and Owner of Kindfolk Yoga
Step 4: Compare Costs and Terms
Take a close look at the financial terms and costs of each financing option to find the best fit for your business.
Payment Options and Rates
Different financing options come with varying repayment structures and effects on cash flow. Here's a quick comparison:
| Payment Type | Structure | Typical Terms | Best For |
|---|---|---|---|
| Traditional Bank Loans | Fixed monthly payments | Standard APR and term lengths from established lenders | Businesses with steady, reliable revenue |
| Revenue-Based Financing | Repayments as a percentage of sales | Flexible fees, generally 2–8% | Businesses with seasonal or fluctuating income |
| Purchase Order Financing | Payment triggered upon order fulfillment | Terms depend on order size and duration | Businesses handling large, occasional orders |
For example, Onramp Funds uses a revenue-based model, charging fees between 2–8%. If your sales slow down, payments adjust automatically, helping you maintain cash flow.
Extra Costs
Ask about any additional fees that might come with your financing, such as:
- Origination or processing fees
- Late payment penalties
- Wire transfer charges
- Early repayment costs
- Digital integration fees
These can add up, so make sure you understand all potential expenses upfront.
Long-Term Growth Support
Think beyond the immediate costs. Look for financing options that also support your business growth. Some lenders offer features like:
- Higher funding limits as your business grows
- Multiple draws to manage ongoing inventory needs
- Cross-platform compatibility for eCommerce
- Flexible terms that scale with your business
For instance, some top lenders provide support across major eCommerce platforms, making it easier to expand your business across multiple sales channels.
Next Steps
Now that you understand your financing options and what lenders look for, it's time to take action. Here's how to secure the funds your business needs:
Connect and Compare
Sync your store data with financing platforms to receive tailored offers. For example, Onramp Funds requires an average of $3,000 in monthly sales and reviews your sales history to provide customized funding options.
Calculate Your Needs
Use funding calculators to figure out how much financing you require. Factor in your monthly revenue, inventory demands, seasonal fluctuations, and marketing plans.
Check Platform Compatibility
Ensure your chosen financing option works seamlessly with your eCommerce setup. Providers like Onramp Funds integrate with leading eCommerce platforms for smoother operations.
Seek Expert Advice
Reach out to provider support teams to discuss your business needs. Nick James, CEO of Rockless Table, shared his experience:
"Applied, got our offer, and had cash in our bank account within 24 hours. Their professional team helped deploy the cash to effectively grow our business."
Choose the Right Option
Pick the financing solution that aligns with your business model. For example, revenue-based financing is a smart choice for businesses with seasonal sales trends. Torrie V., Founder of Torrie's Natural, explains:
"Onramp has simplified cash flow by automating everything: easy to request, set it and forget it payments - quick and fast!"
