Thinking about money in any sense can cause unwanted stress and anxiety in your life. That is why we wanted to take a moment to review the various funding options available to growing small and medium-sized businesses.
Thinking about money in any sense can cause unwanted stress and anxiety in your life. That is why we wanted to take a moment to review the various funding options available to growing small and medium-sized businesses. Let’s begin!
Your first thought for funding your business could be to go to a bank--it makes sense to go to a place you know has large sums of money. Although banks may be the most obvious solution to funding your e-commerce business, it does not mean they’re the best or most accessible.
Banks typically offer credit-based loans that require personal guarantees. You could run into financial trouble if you are unable to pay these loans back, especially when your business has a slow month and cannot keep up with the monthly, fixed repayment schedule that often accompanies a bank loan. These loans may also come with high closing costs, meaning that a portion of your loan amount is withheld by the financial institution as their fees up front. These extra fees can add up and put your business even further behind. Another issue with using a bank as your funding source is that it takes time, which you may not have. You may need funding quickly and cannot afford to wait for approval. Bank loans can present a viable funding solution for certain businesses, but personal risks and high costs can often make loans a huge risk and personal liability.
Other e-commerce funding sources and credit facilities may fund up to 50-100% of your monthly revenues but have strict guidelines for what the funds could be used for. These rules can be restrictive, which may mean that you still don’t have the cash on hand to satisfy the various expenses of running a business. These funding channels also provide short term funding that lasts from three to six months, in most cases. Like banks, many of these other e-commerce funding sources have relatively strict repayment schedules and/or collateral in the form of your other products or revenue streams, making it stressful to keep up with payments when your sales are down. Many of these funding sources claim that they only take back their capital as you sell, but many require monthly minimum payments regardless of the month’s revenue. Depending on which funding source you choose, you could be dealing with credit checks, personal guarantees, and closing costs. While these funding sources can be an adequate short-term bridge, they are often restrictive and costly in the long term.
What a headache! We know firsthand how challenging it is to run a business when everything is going right. The added stress of wondering how to access capital, and then repay it, is not something that successful entrepreneurs should have to face. Our team experienced this issue and set out to create a funding solution tailor-made to growing e-commerce businesses
Forever 8 is a long-term capital partner, funding 100% of your inventory needs, including any re-orders. We determine eligibility by looking at historical sales and projections, meaning that your personal credit isn’t factored into our decision. Forever 8 takes on product risk, meaning that if your products take longer to sell than expected, we don’t come after you personally for repayment. Forever 8 never takes an equity stake in your business, which means that you control your business and maintain your upside. We are a true partner that accelerates your growth by funding 100% of demand, allowing you to scale with your demand and never face out of stock events or inventory funding constraints.
We hope this article was informative and helpful!
Until next time, let us know if you have any questions or comments below!
Forever 8 recoups our investment (plus a small fee) as you sell. Take longer to sell than anticipated? No problem, we will work with you to ensure that we are both in alignment. Sell faster than anticipated? Great, our fees will be lower and we can order you more inventory to keep pace with your demand.
We are a partner. We aren’t here to offer quick bridge loans. Instead, we work together for at least a year, funding 100% of your inventory needs.