KEY TAKEAWAYS
- Learn how much does It cost To open an E-Commerce store
- Understand why personal loans are ideal for E-commerce funding
- Discover tips to improve your odds of approval
Did you know that 34% of shoppers shop online at least once a week? So if you are thinking about opening an e-commerce store, yes, it’s the right and profitable track to follow. But this all can feel fun and exciting until the funding part kicks in.
How much should be spent? What needs to be paid for the right way? And what can wait? People don’t think about it much, but setting up the store, buying products, and running ads all cost more than we expect.
This is where financing options step in the game to help cover the early expenses without putting all the pressure on your personal savings. From small business loans to personal loans, there are many ways to fund an e-commerce store without overcomplicating things.
Let’s dive into this guide, explore these options, and see how they can help you open your own e-commerce store.
The truth is, starting an e-commerce store can range anywhere from $2,500 to a total of $100,000+.
That’s actually a pretty wide range.
Without the required financing your dream store will always remain a dream.
Below, you will find information about:
Personal loans are progressively becoming some of the most sought-after funding opportunities for first-time ecommerce entrepreneurs. Here’s why.
Personal loans don’t ask you to have years of operating history or huge piles of paperwork; unfortunately, traditional bank loans do.
Instead, personal loans are given to qualifying individuals depending on their creditworthiness.
When you look at Chase personal loans and some other big bank offerings, you’ll note that they offer fixed interest rates with fixed monthly payments.
It’s less challenging than ever to budget when starting your new e-commerce store with a personal loan.
Personal loans also have faster processing times than standard business loans.
Some personal loans can be processed within 24 hours.
Think about what you can pay for with an e-commerce store
Personal loans can be utilized to pay for:
You can actually use the money however you’d like. There aren’t any restrictions.
Personal loans aren’t your sole option. Here are four other methods to fund your e-commerce store.
Business credit cards are a wonderful way to dip your toe in the water.
You’ll be given approval quickly and can utilize the cards like revolving credit.
Plus, many give you rewards that can additionally help you save money on future business purchases.
Cons?
Interest rates are higher compared to personal loans. If you only pay the minimum payment every month, your interest will quickly add up.
If you fit in the mold, Small Business Administration Loans are a great choice.
Interest rates and monthly payments will probably be lower than for a personal loan. But it takes much longer to get the money in your hands.
Many aspiring entrepreneurs aren’t familiar with the fact that these loans exist. According to a new study from the Federal Reserve, only 37% of small employer firms even submitted applications for business financing within the past 12 months.
Many company owners start here.
Friends and family can be excellent sources for funding. It’s usually much more uncomplicated to get money from someone who cares about you than from a bank.
There is a downside, though. Mixing money with relationships is not good for personal life.
If you go this route, make sure all money is noted well and settled back according to your loan agreement.
Consider your friends and family equivalent to another lender.
If you want to go directly to your customer to fund your e-commerce store, think about crowdfunding.
Famous crowdfunding platforms like Kickstarter and Indiegogo let you raise money straight from your future customers.
A huge advantage of crowdfunding is that you’ll validate your product vision as you raise funds. If people are excited to back your campaign, then you know there’s market demand for your product.
When you begin shopping around for e-commerce store funding, you’ll instantly realize there are hundreds of options.
So, how do you know which path is suitable for you?
Ask yourself these questions:
As a rookie e-commerce entrepreneur, personal loans give you the best of both worlds.
They’re accessible to most people and come with fair interest rates and payment agreements.
One more thing…
According to the FDIC’s most recent small enterprise lending survey, banks can simply process loans up to $100k in just five business days. That’s 76% of all banks.
This is extremely helpful if you need the money fast to start your e-commerce business.
Compare that to SBA loans, which can take anywhere from 30 to 90 days.
When viewing funding options, think about how fast you require the money.
You can enhance your odds of getting approved for financing by implementing a few simple tips.
Understanding your credit score before applying for financing is crucial.
Get your credit reports from Experian, Transunion, and Equifax. Examine them over and check if there are any mistakes you may be able to dispute.
The better your credit score, the simpler it will be to get financing.
Also, for personal loans, lenders want to know whether you can repay the money or not.
Having a precise plan for your e-commerce store tells the lender you’re trustworthy and have done your homework.
You don’t have to raise or borrow the full value you think your company may require right away.
Try reaching out for a smaller loan to help you get started. Once your business finds itself profitable, you can always ask for more funding.
Don’t just sign up for the first offer you receive.
Even if you’re only going for a small loan, analyze rates from multiple lenders. A half percent change in interest adds up over time.
Before you apply for any funding, make sure you have the following:
Not already having these documents ready will slow down the whole application process.
Funding your first e-commerce store is simpler than you would imagine.
Personal loans offer a simple and streamlined way to fund your business without hopping through the hoops associated with traditional bank loans.
Remember…
The e-commerce industry is doing well right now.
If you have good money to start your own store, there’s no excuse why you can’t get a piece of the pie.
Think about your personal financial situation, and then explore which e-commerce funding possibilities are available to you.
Here’s to your victory!
Why use a personal loan?
They offer faster processing and require less business history than traditional bank loans.
How long do SBA loans take?
The approval and funding process can take anywhere from 30 to 90 days.
Is crowdfunding better?
It is excellent for validating your product and raising funds without incurring debt.
