Ecommerce finance for stock and growth

For most online sellers, the cash cycle runs from paying a supplier to receiving a marketplace or payment payout, and it is often longer than founders expect. Ecommerce business finance is mainly about funding that gap so growth is not held back by cash.

A typical cycle might include a supplier deposit, the balance before shipping, weeks in transit, time in a warehouse, advertising to drive sales, and then a payout cycle on top. Returns and chargebacks can then take back part of what was paid out. The faster a business grows, the more cash this cycle absorbs.

• Paying overseas suppliers: trade finance can pay a supplier on your behalf, with the company repaying over an agreed period once the goods arrive and start selling.
• Holding stock for peak season: stock finance can fund inventory you hold, often repaid as it sells.
• Advertising and short-term gaps: a revolving credit facility lets you draw funds for campaigns and repay as sales come in.
• One-off projects such as a new website, warehouse systems or a product range: an unsecured business loan gives fixed repayments over a set term.
• A large VAT bill after a strong quarter: VAT loans spread the payment over several months.

Revenue-based funding gives the company a lump sum that is repaid as a share of future sales, so repayments rise in busy periods and fall in quiet ones. Providers typically agree a fixed total repayment at the start, rather than charging interest over time.

Because the total is fixed, repaying quickly during a strong season can make the effective cost higher than it first appears. Before agreeing, check:

• What counts as revenue, and which sales channels the provider takes its share from
• Whether there is a minimum payment or a deadline if sales slow down
• Any restrictions on how the money can be used, such as stock or marketing only
• What happens if a marketplace account is suspended or you change platform

A merchant cash advance works on a similar principle, with repayments taken from card takings.

Funders that understand ecommerce look beyond the annual accounts to recent trading data. Points they often review include:

• Sales trend over the last year, including seasonal peaks and dips
• Gross margin after platform fees, delivery, returns and advertising
• How much depends on a single marketplace or a single product
• Marketplace account health and any history of suspensions or held funds
• Stock levels, ageing stock and supplier terms

• Plan peak-season funding several months ahead, allowing for production and shipping lead times.
• Keep sales, payouts and advertising spend reconciled in your accounts, as funders often check one against another.
• Sell through or discount ageing stock before applying, so your stock position looks healthy.
• Compare the total cost of each option, not just the repayment amount, and check early settlement terms.
• Expect directors to be asked for personal guarantees on many facilities.

Welcome Finance is a commercial finance broker, not a lender. We work with online retailers run as limited companies, LLPs or partnerships of four or more partners.

A dedicated relationship manager supports you by phone, email and chat from first enquiry until the lender pays out. We check eligibility in about 60 seconds without affecting your credit score, and lenders on our panel run their own checks only if you choose to apply.

We charge you no fee. The lender pays us a commission when the finance completes. You can ask how much it is, and it can differ between lenders. See how we are paid.

Can a marketplace-only seller get finance?

Yes, some funders work with companies that sell mainly or only through marketplaces, usually by reviewing payout reports or connected sales data. Heavy reliance on one platform may affect how much they offer.

Is revenue-based funding cheaper than a loan?

Usually not. It offers flexibility when sales are uneven, but it often costs more than a term loan. Compare the total repayable against other options.

Is ecommerce business finance regulated?

Lending to limited companies, LLPs and partnerships of four or more partners is generally unregulated, and Consumer Credit Act protections generally do not apply. Read the terms carefully and take advice if unsure.

Can finance cover stock still in transit?

Trade finance is designed for goods being bought and shipped. Stock finance more often covers goods already in your warehouse, though lenders differ.