Funding for Online Sellers

Did you know that 47% of startups fail due to insufficient funding, and 44% of existing businesses struggle to make a profit because they always run out of working capital? Don’t let your business be just another statistic. Read on!


Feel like you’re running on empty, or your cash reserves are almost tapped out? Before you start thinking about cutting back and risking your profits, consider financing. It’s the quickest and most effective way to shore up your financial gaps.


In this article, we’ll explore ten funding options to kickstart or scale your online business. I'll break down how each option works and how you can qualify. Let’s get your business the cash it needs to thrive!


Credit Cards


Using a credit card to fund your online business is like getting a bank loan with a twist: you don't get cash upfront, you're limited to credit card-accepting purchases, and you must pay off the balance quickly to avoid interest charges.


So, how can you effectively use this option to fund your online business despite these limitations?


In the digital age, most suppliers accept credit cards, giving you more flexibility regardless of the products you sell. Plus, you can earn rewards points, miles, or cashback, which can be reinvested in your business.


For example, you can use cashback rewards to buy more inventory or points for business travel. For marketing, charge online ads to your credit card and track ROI for profitability.


When investing in software to automate and streamline processes, credit cards are often required for payment and can also help you take advantage of annual payment discounts.


Lastly, your credit card is your most accessible emergency fund. Whether you run out of supplies or need to fix a machine, your credit card can be a lifesaver.


A Few Reminders


  • Opt for a card with low interest rates or introductory 0% APR offers, and consider business-specific credit cards for higher limits and rewards.
  • Create a budget to manage expenses and use accounting software to track your spending.
  • Regularly review your statements and set up automatic payments to avoid missed payments and interest charges.
  • Consider transferring high-interest balances to 0% APR cards to save on interest, but be mindful of any associated fees.


Bank Loans


Another funding option you can explore is bank loans, available in various types including term loans, lines of credit, equipment loans, and commercial real estate loans. Each type suits specific expenses.


You can use these loans for different needs. For example, get a term loan for bulk inventory purchases during peak seasons. If you want to launch a new website or add new products, a line of credit is a great option.


However, getting a bank loan isn’t as simple as it sounds. You’ll need to meet certain criteria and prepare some documents. Here’s what you should do:


  1. Prepare a solid business plan: Outline your business model, target market, marketing strategy, and financial projections to demonstrate viability.
  2. Understand loan types: Familiarize yourself with different loans such as term loans and lines of credit, and choose the best fit for your needs.
  3. Strengthen credit scores: Ensure your personal and business credit scores are strong, and gather all required documentation, including financial statements, tax returns, and legal documents.
  4. Research lenders: Compare terms from various banks, credit unions, and online lenders, including interest rates, repayment terms, fees, and loan amounts.
  5. Submit a complete application: Provide all necessary information and collateral if required.
  6. Allocate funds wisely: Use the loan for specific business needs like purchasing inventory, marketing, or expanding operations, and monitor your spending closely.
  7. Maintain good financial records: Keep detailed financial records, communicate with your lender, and ensure timely repayments to avoid penalties and maintain a good credit rating.


SBA Loans (Small Business Administration)


If you own a registered small business in the U.S., you can apply for an SBA loan to boost your financial resources. Use the funds to buy inventory, purchase equipment, run ad campaigns, hire and train staff, or cover daily expenses.


SBA loans offer various funding options for online businesses, including the 7(a) Loan Program for working capital, the 504 Loan Program for fixed assets, and Microloans for smaller needs.


To qualify, your business must meet several criteria:


  • Meet the SBA’s size standards.
  • Be for-profit.
  • Operate in the U.S. or its territories.
  • Use the loan for a sound business purpose.
  • Demonstrate the ability to repay the loan from cash flow.
  • Have a good credit history.
  • Have a reasonable amount of your own equity invested in the business.
  • Have management experience or relevant experience.
  • Prepare necessary documents, including a business plan, financial statements, tax returns, and personal details.


Get your documents ready, then choose an SBA-approved lender using the SBA’s Lender Match tool or through your bank. Submit your application with all required documents and cooperate during the review process.


Approval can take weeks. Once you receive the funds, use them as planned for inventory, marketing, website development, and daily expenses.


Repay the loan on time and keep accurate financial records. Utilize the SBA’s free counseling and training resources for additional support.




Does it feel like your large social media following and hefty email list aren’t making a real impact on your business? Put them to work and boost your cash flow through crowdfunding.


Crowdfunding allows you to raise money by collecting small amounts from many people. It comes in various forms: rewards-based, equity, debt, and donation-based.


To use crowdfunding effectively, start by choosing the right platform. Popular options include Kickstarter, Indiegogo, and GoFundMe, each with its own focus and audience. Understand their fees, audience, and supported projects.


How to Set Up Your Crowdfunding Campaign


  1. Create a compelling campaign: Clearly explain your business idea, goals, and funding needs. Include detailed descriptions, high-quality images or videos, and outline how the funds will be used.
  2. Offer attractive rewards: Motivate backers with perks like early access to products or exclusive merchandise.
  3. Set realistic goals: Ensure your funding goal and timeline are achievable, as many platforms only provide funds if you meet your goal.
  4. Promote widely: Use social media, email marketing, and your network to reach potential backers.
  5. Engage with your audience: Give regular updates and respond to questions and comments to build a supportive community.
  6. Deliver on promises: After the campaign, promptly fulfill your promises to maintain credibility and build a loyal customer base. Satisfied backers can become repeat customers and spread positive word-of-mouth.


Angel Investors


Instead of begging for money from random people, why not target angel investors? These wealthy individuals invest their personal funds in startups and small businesses in exchange for equity.


Where to find them? Angel investors can be found on investor platforms, in startup incubators and accelerators, at business networking events and conferences, and on crowdfunding sites.


These investors are selective, focusing only on profitable ventures. To attract them, you need a foolproof business plan, comprehensive financial projections, and a compelling pitch deck highlighting your value proposition, market opportunity, and potential returns.


When approaching angel investors, make a professional and concise initial contact, followed by a well-prepared pitch. Explain the problem your business solves, your unique solution, market potential, and financial projections.


Be ready to answer detailed questions and demonstrate your expertise and passion. If an investor shows interest, negotiate the terms, including valuation, investment amount, board seats, and exit strategies.


Once terms are agreed upon, formalize the investment with legal documentation and due diligence. Use the funds effectively to grow your business, focusing on key areas like product development and marketing.


Venture Capital


Like angel investors, venture capitalists fund small businesses in exchange for equity. However, venture capitalists typically have more resources and focus on large-scale commercial investments.


If you’re confident in your business’s growth potential, consider seeking venture capital (VC). Here’s how to secure it:


  • Prepare a strong business plan: Include market analysis, a clear business model, growth strategies, and financial projections.
  • Highlight scalability and USP: Emphasize your business's growth potential and unique selling proposition.
  • Build a solid team: Assemble experienced leaders and industry advisors.
  • Develop an MVP: Create a minimum viable product to demonstrate your business’s potential through early market validation.
  • Research venture capital firms: Target firms that specialize in your industry and stage of development.
  • Network and attend events: Go to industry events and startup meetups, and use professional connections to meet VC investors.
  • Prepare your pitch: Have a concise elevator pitch, a detailed pitch deck, and a live demo of your product.
  • Negotiate investment terms: Focus on valuation, equity, and the details in the term sheet when you attract VC interest.
  • Prepare for due diligence: Be ready for a thorough review process and finalize all legal agreements.


After securing the funds, use them strategically to grow and expand your business. Set clear milestones and leverage the expertise and network of your VC partners to accelerate development and overcome challenges.




Grants are financial awards from government agencies, private foundations, and corporations to individuals, businesses, or non-profits. Unlike loans, they don't need to be repaid and are given based on specific criteria set by the grantor.


To win a grant, follow these steps:


  1. Research opportunities: Look for grants that match your business needs and check the eligibility criteria to ensure you qualify. Common criteria include business type, size, revenue, purpose for funding, and location.


  1. Prepare your application: Write a detailed proposal explaining your business goals, how you’ll use the funds, and the expected impact. Include supporting documents like financial statements and business plans. Highlight why you need the funding and the positive outcomes it will create.


  1. Seek help if needed: If you're having trouble, get assistance from business associations or hire professional grant writers. They can guide you, review your application, and help you present a strong case.


E-commerce Financing


Many e-commerce platforms, like Shopify, Amazon, and PayPal, offer financing to qualified businesses. Explore their options to see if you qualify.


Qualification is typically based on your sales history and performance on the provider’s platform. Each platform has unique criteria. For example, PayPal requires a certain level of annual sales, Shopify evaluates your store's performance, and Amazon Lending invites sellers based on their sales history.


Once eligible, apply promptly. The process is usually straightforward and quick. You might need to present documents like financial statements, tax returns, bank statements, and sales data from the platform.


To maximize the benefits of e-commerce financing, use the funds strategically and maintain good cash flow management. Monitor your sales and expenses closely to handle repayments without disrupting operations.


Successful repayment can increase your eligibility for future funding, supporting ongoing business growth. By leveraging these financing options, online sellers can effectively scale their operations and achieve long-term success.




If you’re not eligible for traditional bank loans due to poor credit or lack of collateral, consider microloans. These small loans, typically ranging from $500 to $50,000, are offered by non-profits, community lenders, and online platforms to support small businesses and startups. They often come with lower interest rates and shorter repayment terms than traditional loans.


To secure a microloan, determine how much you need, the purpose of the loan, and find suitable providers like Kiva, Accion, and Opportunity Fund. You’ll typically need a business plan, financial statements, and a minimum credit score.


Many microloan providers also offer mentorship, financial education, and networking opportunities, which can help you grow your business. By planning carefully and using microloans, you can effectively fund your online business and set it up for success.


Business Incubators and Accelerators


Some institutions offer valuable non-monetary support to startups and small businesses, including free workspace, mentorship, and networking opportunities. While you might not receive direct funding for business expenses, you can save significantly on office costs and gain access to crucial knowledge and connections.


9-Step Guide to Qualify for These Programs


  1. Develop a strong business idea: Ensure your idea is innovative, scalable, and solves a specific problem.
  2. Create a solid business plan: Include market analysis, business model, growth strategy, and financial projections.
  3. Build a competent team: Assemble a skilled and experienced team with relevant expertise.
  4. Prepare a Compelling Application: Complete the application form, and include a professional pitch deck and possibly a video pitch.
  5. Meet specific criteria: Align your business stage, industry, and geographic location with the program's focus.
  6. Research and choose the right program: Find incubators or accelerators that best fit your business needs and have a track record of success.
  7. Submit supporting documents: Provide a detailed business plan, financial statements, and market research evidence.
  8. Leverage networking and referrals: Use your network to get introductions and recommendations from mentors or industry experts.
  9. Be prepared for interviews: Practice your pitch and be ready to answer detailed questions about your business.


By participating in an incubator or accelerator program, you can make significant progress, especially when combined with other financing solutions you've secured. Notable programs come from top incubators and accelerators like Y Combinator, Techstars, and 500 Startups.


Final Words Before You Start Prepping Your Loan Application


Financing is just one way to fund your business, and it should often be a last resort. If you can bootstrap your online business, do it. There's nothing more reassuring than knowing you owe no one, and all your profits go directly to your bank account.


This doesn’t mean that the funding options listed here aren't worthwhile. However, if you have less risky ways to fund your online business, choose those first. If you do need to take out a loan, manage your finances carefully to avoid falling into a debt trap.