Financing Your Deal

Finding financing in any e-commerce project can be challenging, whether you’re looking for start-up funds, capital to expand or money to invest over the long term. But given the economy’s state of affairs, securing funds is as complex as ever. We are here to help you find the financing you seek, we’ve had years of experience in various financing techniques and what you should know when evaluating them for your personal situation.


Factoring is a finance method where a company sells its receivables at a discount to get cash up-front. It’s often used by companies without established credit or by businesses such as clothing manufacturers, which have to fill orders long before they get paid. unfortunately, it’s an expensive way to raise income. Businesses selling receivables generally pay a fee that’s a percentage of the total amount. If you pay a 2 percent fee to get funds a month in advance, it’s equivalent to an annual interest rate of about 24 percent. That single reason, has given factoring a bad reputation over the years. That said, during an economic downturn companies to look to alternative financing methods. A receivables exchange can soften this impact. The exchange allows companies to offer their receivables to many factoring companies at once, along with hedge funds, banks, and other finance companies. These lenders will bid on the invoices, which can be sold in a bundle or one at a time.


Get a Bank Loan

While lending standards have gotten much stricter, but banks such as J.P. Morgan Chase and Bank of America have earmarked additional funds for small business lending. So why not apply?

Use a Credit Card

Using a credit card to fund your business is some serious risky business. Fall behind on your payment and your credit score gets whacked. Pay just the minimum each month and you could create a hole you’ll never get out of. However, used responsibly, a credit card can get you out of the occasional jam and even extend your accounts payable period to shore up your cash flow.

Tap into Your 401(k)

If you’re unemployed and thinking about starting your own business, those funds you’ve accumulated in your 401(k) over the years can look pretty tempting. And thanks to provisions in the tax code, you actually can tap into them without penalty if you follow the right steps. The steps are simple enough, but legally complex, so you’ll need someone with experience setting up a C corporation and the appropriate retirement plan to roll your retirement assets into. Remember that you’re investing your retirement funds, which means if things don’t pan out, not only do you lose your business, but your nest egg, too.

Try Crowdfunding

A crowdfunding site like can be a fun and effective way to raise money for a relatively low cost, creative project. You’ll set a goal for how money you’d like to raise over a period of time, say, $1,500 over 40 days. Your friends, family, and strangers then use the site to pledge money. Kickstarter has funded roughly 1,000 projects, from rock albums to documentary films since its launch last year. But keep in mind, this isn’t about long-term funding. Rather, it’s supposed to facilitate the asking for and giving of support for single, one-off ideas. Usually, project-creators offer incentives for pledging, such as if you give a writer $15, you’ll get a book in return. There’s no long-term return on investment for supporters and not even the ability to write off donations for tax purposes. Still, that hasn’t stopped close to 100,000 people from pledging to Kickstarter projects.

Angel Investor

When pitching an angel investor, all the old rules still apply: be succinct, avoid jargon, have an exit strategy. But the economic turmoil of the last few years has made a complicated game even trickier. Here are some tips to win over angel interest:

  • Add experience: Seeing some gray hair on your management team will help ease investors’ fears about your company’s ability to deal with a tough economy. Even an unpaid, but highly experienced adviser could add to your credibility.
  • Don’t be a fad-follower: Did you start your company because you are truly passionate about your idea or because you want to cash in on the latest trend? Angels can spot the difference and won’t give much attention to those whose companies are essentially get-rich-quick schemes.
  • Know your stuff: You’ll need market assessments, competitive analysis and solid marketing and sales plans if you expect to get anywhere with an angel. Even young companies need to demonstrate an expert knowledge of the market they are about to enter as well as the discipline to follow through with their game plan.
  • Keep in touch: An angel may not be interested in your business right away, especially if you don’t have a track record as a successful entrepreneur. To combat that, you should formulate a way to keep them in the loop on big developments, like a major sale.

Secure an SBA Loan

With banks reluctant to take any chances with their own money in the wake of the credit crisis, loans guaranteed by the U.S. Small Business Administration have become a hot commodity. Indeed, funds to support special breaks on fees and guarantees on SBA-backed loans have run out a number of times. And while SBA-backed loans are open to any small business, there are a number of qualifications, including:

  • Under law, the SBA can’t guarantee loans to businesses that can obtain the money they need on their own. So you have to apply for a loan on your own from a bank or other financial institution and be turned down.
  • In order to qualify as a small business, your firm needs to meet the government’s definition of a small business for your industry.
  • Your business may need to meet other criteria depending on the type of loan.
  • After determining that your business meets the qualifications, you need to apply for a commercial loan from a financial company that processes SBA loans since the SBA doesn’t provide loans directly. The bank’s qualifications can be more stringent.


Get a Microloan

The lack of a credit history, collateral or the inability to secure a loan through a bank doesn’t mean no one will lend to you. One option would be to apply for a microloan, a small business loan ranging from $500 to $35,000. Microloans are often so small that commercial banks can’t be bothered lending the funds. Instead of a bank, you need to turn to a microlender. a non-profit organization that works differently than banks. Microlenders offer smaller loan sizes, usually require less documentation than banks, and often apply more flexible underwriting criteria. There are a few hundred microlenders throughout the U.S. and they often charge slightly higher interest rates for loans than banks.