Getting funds for your ecommerce business is really tiresome and hectic work. Because, having a great business in mind, need to be funded immediately so that it heads some revenue or profit on the go.
However, if you are stuck in getting to know the funding platforms for loans and finance in Ecommerce, then you have come to the best place to learn about the same.
In this article let us explore what is funding platform, how important it is to have in an ecommerce business and some types of funding platforms. Along with that let us also explore its advantages and disadvantages, so that you choose the best according to your needs and requirements.
What is meant by funding platforms?
You must have heard about funding platforms if you are into online business. If not, let me explain this to you in simple terms.
Funding platforms are a way to raise money for a project or business. It may be raised for an individual or for an organization. Many people might not be aware of what to do? where to go? how do you do?
Though there is a saying that, “Ignorance is Bliss“. This will not be the case with ecommerce businesses. You must indeed be aware of where to go, whom to ask, and what to do.
Having a great business idea alone is not enough to survive in a business. You must know how to sail the ship in the ocean in big storms as well.
There are a lot of ways the funds can be raised and they are as follows:
- Donation
- Reward
- Equity
- Debt
- Crowdfunding
Now, that you have known about its definition let’s move on to the importance of the same.
Importance of Funding Platforms in Ecommerce
It is important to know some importance of funding platforms as they play a very important role in the success of ecommerce businesses,
1. Access to Capital
It provides the capital share of the ecommerce business. And it can be used in investing in new products, marketing, ads and other important financial needs.
2. Speed and Efficiency
Though old is gold, the traditional way of funding is way too slow and time-consuming. With this type of funding platform, you will get speed and efficient access to your capital money. And with that, you can start your business immediately and maximize your revenue.
3. Diversification
With this e-commerce business, retailers can diversify their source capital which is impossible with traditional methods. This has low risk and ensures that your business has the capital to move forward.
4. Investor Engagement
It has a platform for investors so that they can engage with the business and provide feedback. It is really great as you not only get investment but also advice and ideas from great minds so that you can understand and improve your business at the end of the day.
5. Brand Building
It also helps with rand binding as your ecommerce business needs to be known. They help in providing the exposure it needs. You have a lot of things done if you raise your capital through funding platforms which will be of very much use to your business in the long run.
Types of funding platforms for loans and finance in ecommerce
Doing an ecommerce business can be challenging and getting funded is way more important. Let us look at the types of funding platforms for loans and finance in ecommerce.
1. Traditional Bank Loans
Traditional bank loans are one of the best types of funding platforms. You can all types of loans, business loans for your business.
It is quite a challenge when you get loans from traditional bank loans as it may be a hindrance for people with poor credit scores.
2. Alternative lending platforms
Alternative lending platforms are non-bank parties that lend a ransome amount for your business. You can get money from online lenders, peer-to-peer lenders and much more. they are known for their flexibility and speed. It is an excellent option for businesses that are looking for funds urgent.
3. Crowdfunding platforms
Crowdfunding platforms help people like entrepreneurs or an organization to raise money for their projects, product or service. This helps them to gain money from a large number of people as investors for their business. They are useful as they are easy and effective ways to fund in this type.
4. Government Programs
The government provides various loans and programs to support local businesses. You can make use of there as they are targeted and specified according to the geographic location, a specific type of business and so on. Grab this source if you find yourself eligible for all the things.
5. Invoice financing platforms
Invoice financing platforms let you sell outstanding invoices to money lenders so that you can get the amount immediately. This is ideal for those type of business which has great invoices.
6. Merchant cash advance providers
Under this type, they let you lump the amount in exchange for a percentage of profit from your sales in future. This can be useful for a business that has a steady stream of revenue and needs capital to invest in the business.
Advantages and disadvantages of funding platform
Here are the advantages and disadvantages of each type of crowdfunding platform:
1. Donation-based Platforms
Advantages
People can easily support a cause or project they believe in.
It is a simple and quick way to raise funds without having to offer anything in return.
Donations are usually tax-deductible
Disadvantages
Campaigners may find it hard to attract donors without offering something in return.
There is no guarantee that the campaign will reach its funding goal.
2. Reward-based Platforms
Advantages
Backers receive a product or service in exchange for their support.
Campaigners can easily attract backers by offering enticing rewards.
Campaigners can validate the demand for their product before investing in it.
Disadvantages
Campaigners need to invest time and money to produce and ship rewards.
Backers may be disappointed if the rewards do not meet their expectations.
3. Equity-based Platforms
Advantages
Campaigners can raise larger amounts of money than other types of crowdfunding.
Investors become shareholders in the company and benefit from its growth and success.
Campaigners can access a network of investors who may provide additional support.
Disadvantages
Campaigners must give up ownership and control of their company.
Equity crowdfunding is heavily regulated, which can make it time-consuming and expensive.
4. Debt-based Platforms
Advantages
Campaigners can access funding without giving up ownership of their company.
Campaigners can benefit from lower interest rates than traditional loans.
Lenders receive interest in their investments.
Disadvantages
Campaigners must pay back the loan with interest, which can be a burden on their finances.
Lenders may require collateral, which can be risky for campaigners.
Best 5 Ecommerce Funding Platforms for Loans and Funds
Let us look at the best ecommerce funding platforms for loans and funds one by one.
1. ClearCo
2. 8fig
3. Wayflyer
4. Shopify Capital
5. PayPal Working Capital
Wrapping Up
Thus these are the funding platforms that might be helpful for getting loans and funds for your ecommerce business. Hope you have got enough insight on the same.
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FAQ
What is meant by funding platforms?
Funding platforms are a way to raise money for a project or business. It may be raised for an individual or for an organization.
What are the different types of crowdfunding platforms?
Donation-based, Reward-based, Equity-based, and Debt based. These are the different types of crowdfunding platforms.
