Fund your online business growth with an eCommerce business loan

A revenue-based loan reflects your turnover. It provides capital in exchange for a percentage of your business’s future revenue and is an alternative to debt and equity-based funding, which makes it a popular choice for ecommerce start-ups. You can decide what percentage of your revenue you want to repay each month, so when sales dip or you’re feeling your way as a start-up, you can adjust the repayments and stay in control. 

Best for e-commerce when: Sales are growing, but you need cash flow now to invest in that growth (inventory, marketing, etc.). Repayment scaling with revenue aligns well with e-commerce sales patterns.

Potential challenges: If your sales are highly seasonal or unpredictable, repayment fluctuations can be a risk. Best suits established e-commerce, not brand-new ventures without sales history.

A merchant cash advance is a form of short-term funding to help businesses such as retailers and restaurants that take a high volume of card payments. You must pay the cash advance, and any fees, via a percentage of sales from your card payments. Merchant cash advances, like revenue based loans, can help to alleviate cash flow and support seasonal demands. 

Best for e-commerce when: Your card sales are the bulk of your revenue and have strong seasonal patterns, as you can 'borrow' from future peak sales to solve cash flow issues in slow periods.

Potential challenges: If sales are low overall, it gets expensive. If a peak season is unexpectedly slow, repayment can become a major strain. Not ideal if card sales are a small part of your income.

An ecommerce platform enables a business to manage its online store end-to-end, providing a unified shopping experience. The business can access money directly from within the platform. Here are three financing options:

• Shopify Capital enables Shopify sellers to access business loans and merchant cash advances. Funding is by invitation only to sellers with an established record of sales through Shopify.
• PayPal Working Capital loans are like merchant cash advances against PayPal sales. Capital is provided based on your business’s future revenue, which is determined by your PayPal sales history. Repayments are calculated as a percentage of your PayPal sales.

Best for e-commerce when: You're already established on that platform (Shopify, Amazon, etc.), have a good sales track record, and value the convenience of funding integrated with your sales tool.

Potential challenges: Limits you to funding from that platform's partners, which may not be the most competitive rates. Requires consistent sales history on the platform to qualify.

A business loan is a form of debt finance, comprising the amount that you borrow and must pay back, known as the principal, and the interest that you must pay on top of the loan sum. Interest may be fixed or variable. 

Depending on the lender, additional fees may also apply. Loans can be secured or unsecured. There are many possibilities, so it’s important to compare different offers. 

Best for e-commerce when: You need funding for a specific, predictable expense (large inventory purchase, equipment upgrade, etc.), and have stable enough revenue to manage fixed repayments.

Potential challenges: Traditional lenders can be unsuitable for ongoing, fluctuating cash flow needs, or if you don't have good credit/trading history, but digital lenders such as iwoca can be more adaptive to the needs of ecommerce.

If your business has a relatively steady income and has more trading history, you could try applying for a Flexi-Loan with iwoca. Borrow up to £500,000 and repay over two years. If you want to repay early – we won’t charge you extra fees.

A business overdraft gives you access to additional funds, up to an agreed amount, when your bank balance is no longer in credit. 

• Best for e-commerce when: You need a 'just in case' safety net for short-term needs (unexpected supply chain cost, urgent small repairs). Good for established businesses with steady revenue overall.

Potential challenges: Interest rates can be high, especially if used frequently. Not the best choice for funding major growth, only for bridging temporary shortfalls.

A line of credit loan is when a lender provides funds, up to an agreed limit, that the borrower can use when and as needed. Flexibility and pay-as-you-go are the main advantages, as  borrowers can use the funds at their discretion and will owe interest only on the amount they withdraw, not the entire line of credit. 

Best for e-commerce when: You have recurring but unpredictable expenses (inventory restocking based on trends, fluctuating ad spend, etc.). Flexible access is key, as you only pay interest on what you use.

Potential challenges: Requires financial discipline to avoid overreliance and spiralling debt. Less suitable if your funding need is a one-time major purchase.

Business angel investors or venture capitalists who would provide funding to your business in exchange for an equity stake in the company.

Best for e-commerce when: You have high-growth potential and need significant funding beyond what loans can provide. Be sure you're ready to give up equity and potential control over your business.

Potential challenges: Not suitable for very early stage e-commerce, as investors want a proven idea. The process of securing investment can be long and distracting from running your business.

If you’re a start-up ecommerce business, you’re likely to have high costs and limited revenue and will need ecommerce funding to get you off the ground. Find out about the many start-up funding options and see what’s best for your needs.