Getting eCommerce business credit is simpler than traditional loans. Lenders focus on your sales performance, not your personal credit score. Here's what you need to know:
- Business Age: At least 6–12 months of operating history.
- Monthly Sales: Consistent revenue, often $3,000+ per month.
- Platform Integration: Use platforms like Amazon, Shopify, or Walmart with strong performance metrics.
- Required Documents: Tax returns, financial statements, business registration, and ID.
- Repayment: Flexible, sales-based repayment instead of fixed payments.
Quick Comparison:
| Factor | Traditional Loans | eCommerce Credit |
|---|---|---|
| Evaluation Criteria | Credit score, business age | Sales performance, revenue |
| Approval Time | Weeks to months | Within days |
| Repayment Structure | Fixed monthly payments | Percentage of sales |
| Minimum Business Age | 1+ years | 6+ months |
| Minimum Annual Revenue | $100,000+ | $50,000+ |
Modern funding options like revenue-based funding offer faster approvals and adapt to your sales trends, making them ideal for eCommerce businesses. Keep your sales data accurate and accessible to improve your chances of approval.
What is Revenue-based financing for ecommerce businesses
Core Qualification Requirements
Getting approved for eCommerce business credit involves meeting a set of criteria that lenders use to assess risk and business stability. Knowing these requirements can help you create a stronger application and improve your chances of approval.
Business Age Requirements
Most lenders look for businesses with 6–12 months of operating history. However, if your sales data is strong, revenue-based lenders might be more lenient [1]. This is because lenders need enough data to evaluate how stable and reliable your business is.
Monthly Sales Requirements
Consistent revenue often matters more than high sales figures. Lenders use analytics to estimate your future performance based on your monthly sales [2]. While sales thresholds vary by lender, maintaining steady income is a key factor in credit eligibility.
Credit Score and Business Type
Traditional lenders usually require a personal credit score of 650 or higher. On the other hand, revenue-based lenders focus more on your sales performance [1]. Business structure also matters - LLCs and corporations generally find it easier to access credit, while sole proprietors and marketplace sellers are assessed based on their sales and platform metrics.
These core requirements form the basis for securing eCommerce business credit. However, platform-specific factors and proper documentation can also influence your eligibility. Additionally, the eCommerce platform you use can impact your chances of approval.
eCommerce Platform Requirements
Choosing the right eCommerce platform and managing its requirements can play a big role in securing business credit.
Platform-Specific Rules
Each platform has its own funding eligibility criteria. Here's a quick look at some of the key requirements:
| Platform | Key Requirements |
|---|---|
| Amazon | Professional seller account, strong performance metrics |
| Shopify | Active store, consistent sales volume |
| Walmart Marketplace | Account in good standing, sales history |
| BigCommerce | Platform integration, verified sales data |
| TikTok Shop | Connected store, performance tracking |
Meeting these platform-specific rules is important, but ensuring lenders can easily access your sales data is just as critical.
Sales Data Access
To assess your eligibility for funding, lenders need direct access to your sales data. Here's how they typically do it:
- API Integration: Secure API connections let lenders verify and monitor your sales data in real-time.
- Performance Tracking: Metrics like daily sales, seasonal trends, and growth help lenders tailor funding terms.
- Platform Integration: Your eCommerce platform must connect seamlessly with lenders to provide accurate sales reports.
Onramp Funds, for example, integrates with platforms like Amazon, Shopify, and Walmart Marketplace. This allows for faster approvals based on real-time sales data. Eric Youngstrom, CEO of Onramp Funds, explains:
We build a pretty good crystal ball view into the next 90 days of sales [2]
Transparent and accurate data reporting not only keeps you eligible for funding but also helps you secure better terms [3]. By integrating with your platform, lenders can make quicker, more informed decisions based on your actual sales performance [3].
sbb-itb-d7b5115
Required Documents and Proof
Getting your paperwork organized is key when applying for eCommerce business credit. Here's what you'll need to gather to ensure a smooth application process.
Business Documents Checklist
Lenders typically request several documents to confirm your business's legitimacy and financial standing:
| Document Type | Purpose | Format Required |
|---|---|---|
| Tax Returns | Confirm income | Last 2 years |
| Financial Statements | Demonstrate profitability | Profit & Loss statements, balance sheets |
| Business Registration | Verify legal status | Articles of incorporation, licenses |
| Owner ID | Confirm ownership | Government-issued ID |
After organizing these documents, lenders will also review your banking records to evaluate your financial stability.
Financial and Sales Verification
Lenders use banking records, such as transaction history, recent account statements (covering the last 3–6 months), and vendor payment details, to assess your financial health. However, sales verification offers a more dynamic perspective on your business's potential.
Platforms like Onramp Funds use technology to simplify this process, making it faster and more accurate for eCommerce sellers. Their verification process typically includes:
- Platform Integration: Lenders connect directly to your eCommerce store to access up-to-date sales data.
- AI Analysis: Advanced tools analyze sales patterns to project future revenue.
- Real-Time Monitoring: Ongoing tracking of your business's performance.
As the CEO of Onramp Funds explains:
We build a pretty good crystal ball view into the next 90 days of sales [2]
This tech-driven approach emphasizes growth trends and real-time data, reducing the need for excessive documentation while offering a clearer picture of your business's potential [3].
Other Funding Options
eCommerce sellers today have more choices than ever when it comes to financing. Beyond traditional business credit, there are solutions tailored specifically for the unique demands of online retail. These options address challenges like fluctuating sales and rapid growth, offering flexibility that standard loans often lack.
What Is Revenue-Based Funding?
Revenue-based funding is a flexible alternative to traditional loans. Instead of fixed monthly payments, businesses repay a percentage of their sales. This makes it ideal for handling seasonal trends or periods of rapid expansion.
| Feature | Traditional Loans | Revenue-Based Funding |
|---|---|---|
| Payment Structure | Fixed monthly payments | Percentage of sales |
| Evaluation Criteria | Credit score & history | Sales performance & data |
| Approval Time | Weeks to months | Often within 24 hours |
This type of funding adapts to your sales performance, making it a practical choice for eCommerce sellers looking for adaptable repayment options.
Comparing Standard Loans and Modern Solutions
Traditional business loans often involve strict requirements, including detailed paperwork, excellent credit scores, and years of business history. Modern funding alternatives, however, leverage technology to assess businesses differently. For instance, Onramp Funds uses machine learning to evaluate real-time sales data, offering a more dynamic and efficient approach.
Key benefits of these modern funding options include:
- Faster approvals, sometimes within a day
- Flexible qualification standards
- Funding amounts tied directly to your sales
- Automated tools to monitor performance
These features make them a practical choice for businesses that need quick and flexible financial support.
What Do eCommerce Lenders Look For?
Lenders specializing in eCommerce focus on performance metrics rather than traditional benchmarks. Here's what they typically require:
| Requirement | Typical Threshold |
|---|---|
| Monthly Sales | Minimum $3,000 |
| Platform Integration | Compatibility with major eCommerce platforms |
| Sales History | Up-to-date performance data |
| Business Documentation | Basic verification only |
Summary
Getting credit for an eCommerce business means meeting certain qualifications, which vary depending on whether you're looking at traditional loans or newer funding options. The world of eCommerce financing is constantly changing, offering solutions designed specifically for online sellers.
Here's a quick comparison of the main qualification factors:
| Requirement Type | Traditional Loans | Modern Funding Solutions |
|---|---|---|
| Business Age | 1+ years | 6+ months |
| Annual Revenue | $100,000+ | $50,000+ |
| Approval Process | Lengthy with lots of paperwork | Fast with minimal documentation |
| Platform Integration | Not required | Supports major platforms |
Thanks to advanced technology, lenders now use real-time sales data to evaluate eCommerce businesses more accurately. This has made funding more accessible, with some merchants reporting up to a 75% increase in revenue within just 180 days of receiving funds [2].
If you're exploring your financing options, keep these key points in mind:
- Platform Compatibility: Make sure your eCommerce platform is supported.
- Sales Performance: Keep consistent sales records.
- Documentation: Have basic business verification documents ready.
- Growth Plan: Outline how you'll use the funds to grow your business.
Revenue-based funding has been especially helpful for eCommerce businesses that might not meet traditional loan requirements. These newer funding options offer the flexibility to handle seasonal changes and fast growth, all while keeping cash flow steady.
With these factors in mind, let’s dive into some common questions about eCommerce business credit.
FAQs
Will Amazon give you a loan?
Yes, Amazon Business Lending offers loans, but it’s available only to invited US-based sellers. This program stands out from traditional financing options in several ways:
- No paperwork is needed for the application process.
- Approval decisions are made quickly.
- Funds can be used for various purposes like inventory, marketing, or equipment.
- Eligibility requires being an active Amazon seller with strong performance metrics.
If you don’t qualify for Amazon’s program, you can consider alternatives like Onramp Funds, which focus on eCommerce financing. These platforms use real-time sales data to provide funding tailored to your sales performance.
Eligibility for eCommerce funding, whether through Amazon or other providers, often depends on factors like:
- Your selling history on the platform.
- Monthly sales volume.
- Account health metrics.
- Overall business performance.
Knowing the criteria for these programs helps you choose the right financial solution for your business needs.
