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eCommerce businesses take payments from customers via debit and credit card. This makes them perfect candidates for credit card factoring, or merchant cash advance. With this type of working capital loan, a lump sum is provided in exchange for a fixed percentage of future debit and credit card transactions. Significant payments are only made when sales volume is on the rise since this type of financing is tied to sales volume.
In addition to this payment system, what makes credit card factoring so ideal for eCommerce is that good cash flow is not a strict requirement for approval. Funds can be distributed at almost any stage of your financial cycle, regardless of seasonal ups-and-downs.
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Many UCS clients use credit card factoring to finance inventory and marketing campaigns, both of which are typically long-term investments. Discounts for inventory may be offered when revenue is predictably down, and marketing campaigns must be launched well ahead of peak buying periods. Credit card factoring allows you to make your investment several months before you pay off the debt with the increased revenue from your expanded selection and price-based promotions.
Other small business loans that could make sense for your needs are short-term working capital loans or business line of credit. The former option can be a great way to pay your vendors upfront or ahead of due dates. This will not only make you eligible for discounts but also foster a relationship that ensures quick access to new products all throughout the year.
Business lines of credit are geared towards short-term investments, or last minute inventory financing. If an item is selling surprisingly well, you could order more and then pay off the entire balance with the sales that take place immediately afterwards. Business lines of credit can also get you over the occasional financial “hiccup,” which are all-too-common given the volatile nature of the eCommerce industry. Apply now to see how much you qualify for!