How to Finance Your Business: 10 Outstanding Options For Your Shopify Store
Hey, guys and gals! Get ready for an exciting journey through entrepreneurship! When your Shopify store gets going and you reach those exciting milestones - like your first sale, your first buddy on staff, your first brick-and-mortar location - you'll soon realize that growth requires moolah. You gotta beef up your inventory, unveil new products, and conquer fresh markets. But how are you gonna foot the bill?
That's where fresh financing comes in, my entrepreneurial amigos. Sure, you may have started with a decent chunk of capital, but as your business takes off, so do the expenses. Take Dollar Shave Club, for example. Starting as a simple online subscription, they grew and needed more dough to launch fresh products and expand their distribution. Don't forget Warby Parker, who snagged $41.5 million to take on the eyewear scene and debut their brick-and-mortar shops. If you're ready to level up your Shopify store, let's explore the dope options to finance it - from angel investors to microloans, crowdfunding to revenue-based kickbacks. So gear up for a wild ride, 'cause we're about to hit the ceiling!
What exactly is Shopify business financing?
Shopify business financing is a funding program designed specifically for businesses that use the Shopify platform. Yo, this program hooks you up with mad options to get the cash flow your biz needs to level up and reach its true potential. The financing options on offer through Shopify are straight-up thorough, giving you the bread to cover all kinds of expenses - from stocking inventory to spreading the word and even upgrading your gear. Unlike traditional financing options that may require lengthy applications, collateral or high credit scores, Shopify's financing options are tailored to the unique needs of each individual business.
One of the key benefits of Shopify business financing is its flexibility. Businesses can pick from a bunch of ways to get cash that fit their needs, like quick loans, getting an advance on money from selling goods, or borrowing money for equipment. Shopify even has something called a "never-ending stash of cash," where businesses can tap into money whenever they want.
Getting Shopify business financing is really easy. Just tell them some basic stuff about your business and money situation, and they'll figure out what money options are good for you. The application process is typically quick, with businesses receiving a decision on their application within a matter of days.
Shopify business debt vs Equity Financing, how do they compare?
Shopify offers both debt and equity financing options for businesses. Debt financing is a type of financing where businesses borrow money that must be repaid with interest, while equity financing involves selling ownership in the company in exchange for funding.
Getting into debt can be a decent choice for businesses that wish to hold onto their firm's ownership and control. By going into debt, businesses are able to borrow money and pay it back slowly with added charges, all without ceding any ownership or control of the company. At Shopify, there are a variety of debt financing choices, such as brief loans, cash advances, and equipment financing, that provide businesses with access to the resources they need to grow and develop while still retaining their company's ownership and control.
Contrarily, equity financing involves trading a part of a business in return for monetary support. This type of financing is suitable for businesses looking for long-term financiers and willing to give up some control and ownership in exchange for the funds. Through their "Shopify Capital" program, Shopify provides equity financing to firms by providing funds in return for a share of their future earnings.
Assessing the strengths and weaknesses of each method is vital when deciding on either debt or equity financing possibilities.
Debt financing typically involves lower interest rates and predictable repayment terms, but businesses must be able to meet their repayment obligations or risk defaulting on their loan.
Groovy, check it out: equity financing on the other hand means you don't gotta pay back anything and can get that sweet, sweet cash for the long haul. But, the catch is, ya gotta be cool with giving up some of the power and ownership over your company.When you fund your Shopify store, you unleash the power of crazy growth! With money in hand, you can pump up your inventory, expand your marketing game, and take your biz to epic levels!
What are the benefits of business financing for a Shopify store?
Ah, it is clear you will have to look for a masterful exposition on the benefits of business financing for a Shopify store!
Do not panic as we now take you to some of the thrilling benefits of securing the needed finances for your Shopify store:
EXPLOSIVE GROWTH POTENTIAL:
When you finance your Shopify store, you unlock the power of explosive growth!
Money talks, boy! With some dough, you can crank up your product stash, boost your promo game, and take your hustle to the next level! And let's be real, in this cutthroat online business world, having an ace up your sleeve is key. So, with some funding in your back pocket, you can stay reigning champ and dominate the competition!
In the crazy world of selling online, being on top is everything! With some cash, you can keep ahead of the game and beat out your competitors, giving you the advantage in the market!
FREEDOM: Let's be real, life is unpredictable! With funding, you gain the freedom to adapt to unexpected twists and seize fresh opportunities as they arise. Whether you need to splurge on new gear, switch up your ad plan, or ride out a rough patch, funding can give you the backup you need to stay sharp and prosper!
CASH FLOW MANAGEMENT: Cash is king, and financing can help you manage your cash flow like a pro! With flexible repayment terms, you can align your loan payments with your revenue stream, keeping your finances in check and avoiding costly overdraft fees or missed payments.
LONG-TERM VALUE: Financing your Shopify store isn't just about short-term gains, it's about building long-term value! With some dough, you can pump some cash into your brand game, make your customers feel like a million bucks, and set yourself up for long-term success.
So there you have it, my friend! The benefits of financing for a Shopify store are truly mind-blowing! From explosive growth potential to long-term value, financing can help you take your business to the next level and beyond!
Top 10 Shopify Business financing options in 2023
- Bank loans
It is worth noting that lots of Shopify businesses go for bank loans to get some funding. But what exactly does that involve, and what's good and bad about it? And, where can you even get one of these loans?
Basically, bank loans are where a business gets some cash from a bank, with the agreement to pay it back over time, along with interest added on. The details, like how much you borrow, the interest rate, and how long you have to pay it all back, all depend on the bank and other things like how good your credit is.
- Lower interest rates compared to other forms of financing
- Fixed repayment schedule allows for easier budgeting and planning
- Difficult to qualify for, especially for newer businesses or those with poor credit histories
- Lengthy application process with extensive documentation requirements
- Defaulting on a bank loan can have serious consequences for a business's credit score and financial stability
Here are some resources for finding bank loans for Shopify businesses:
- Good old-fashioned banks, like Wells Fargo, Bank of America or Chase
- New-age banks, like Kabbage, BlueVine or Fundbox
- Money lending sites, like LendingClub or Prosper
Like with any way of getting money, it's important for businesses to really think about what they need and what they can do before picking a bank loan.Shopping around and comparing rates and terms from multiple lenders can help businesses find the best fit for their needs.
- Online loans
Online loans are a popular financing option for Shopify businesses, especially for those who may not qualify for traditional bank loans. Basically, online loans work just like regular bank loans, except you apply for them entirely over the internet. We'll go over what they are, their upsides and downsides, and where to find them. Many online lenders offer small business loans, which can be a good option for Shopify businesses that need access to capital quickly and with less stringent qualification requirements.
- More accessible qualification requirements compared to traditional bank loans
- Faster application processes, with some lenders offering same-day funding
- Higher interest rates compared to traditional bank loans
- Additional fees, such as origination fees or prepayment penalties, may apply
Here are some resources for finding online loans for Shopify businesses:
- Online lenders such as OnDeck, Kabbage, BlueVine, and Fundbox
- Loan marketplaces like Fundera or Lendio
- Small business grants
What are small business grants?
Small biz grants are like free money given by the government, rich folks, or organizations to help small businesses grow and make banks. They ain't like loans, because you don't gotta pay back the dough and there's rules to follow.
- You ain't gotta repay the grant, so it won't make your debt bigger.
- You can get a fat chunk of cash to spend on whatever biz expenses you got.
- It looks good on your biz record and shows folks you're the real deal.
- You might get extras with the grant, like coaching, biz contacts, or special resources to help you grow and shine.
- Grant application processes can be highly competitive and time-consuming, with a low success rate.
- The cash you get from grants might come with some strings attached, stopping you from using it however you want.
- It can be a total hassle for small businesses to track and report on their use of grant money. And even if you do get approved, the amount you receive might not cover all your needs.
If you're a small business looking for grant opportunities, here are some places to try:
Government: Federal, state, and local government groups are a good source of grants, but you'll need to meet specific requirements. The Small Business Administration (SBA) is one place to start.
Private organizations: Foundations, companies, and non-profits may also offer grants, especially to businesses in certain industries or areas.
Crowdfunding: You can also ask people to contribute to your business via platforms like Kickstarter or Indiegogo. Then, they get rewards or even part of your business in exchange!
- CBA Loans
CBA Loans is a kind of biz loan provided by the Commonwealth Bank of Australia (CBA). It can be used to fund diverse parts of a biz like stuff, gear, and operating cash. Check out the pluses, minuses, and funding for CBA Loans below:
Killer interest rates: CBA has rad interest rates for its biz loans, which can keep borrowing costs low.
Flexible loan terms: CBA Loans can be customized to suit the needs of individual businesses, with flexible repayment terms and loan amounts.
Quick approval process: The application and approval process for CBA Loans can be completed quickly, which can be beneficial for businesses that need funding urgently.
Strict eligibility criteria: To qualify for CBA Loans, businesses need to meet certain eligibility criteria, including having a strong credit history and financial track record.
Collateral requirements: CBA Loans may require businesses to provide collateral, such as property or inventory, to secure the loan.
Limited accessibility: CBA Loans are only available to businesses that are located in Australia and meet the bank's eligibility criteria.
Commonwealth Bank of Australia: The bank offers a variety of business loan options, including CBA Loans, which can be accessed through its website or through a local branch.
Business loan brokers: There are a number of brokers that specialize in connecting businesses with lenders, including CBA. These brokers can help businesses navigate the application process and find the best loan options for their needs.
Government loan programs: In some cases, businesses may be able to access funding through government loan programs, such as those offered by the Australian government.
- Credit union financing
Credit unions are nonprofit financial cooperatives that provide a range of financial services, including loans for businesses. Let's go over some perks, drawbacks, and ways to get credit union financing:
Better deals: Credit unions belong to their members and aspire to offer financial services at a cheaper cost than conventional banks. This often translates to lower interest rates on business loans.
Personal care: Credit unions usually serve fewer customers than big banks, which implies that they can provide more personalized support to their members.
Community love: Credit unions frequently concentrate on backing their local communities, making them attractive to businesses that want to support local companies and get support in return.
Limited access: Credit unions may have fewer branches and ATMs than traditional banks, which can be a disadvantage for businesses that require widespread access to their financial services.
Eligibility criteria: Credit unions typically only allow in folks who qualify based on specific criteria, like residing or working in a particular location or having ties to a particular group. This can be a drawback for businesses that need more intricate financial options as credit unions might not offer the same variety of services as regular banks.
Local credit unions: Businesses can research and join local credit unions that serve their area and offer business loans. Many credit unions also have online applications available.
Credit union associations: National or state-level credit union associations can help businesses locate credit unions that offer business loans and provide other resources for members.
Business loan brokers: Similar to traditional banks, credit unions may also work with brokers who specialize in connecting businesses with lenders, including credit unions.
Crowdfunding is when a business raises money by getting small donations from lots of people, usually on the internet. Here are some good things, bad things, and places you can do crowdfunding:
Lots of people can see it: Crowdfunding lets businesses reach a big audience from all over the world.
It's easier to start: Crowdfunding places don't need as much stuff from you as traditional ways of getting money, so it's easier for businesses to start raising money.
It makes your idea seem popular: Crowdfunding can get people excited about your idea and make them talk about it.
It's a big time investment: Creating a successful crowdfunding campaign requires plenty of effort to create something that'll grab people's attention and motivate them to donate.
It might flop: Even if you put in a lot of work, your crowdfunding campaign could still fall short of your funding goals.
There's a cap on contributions: Crowdfunding platforms restrict the amount of money you can receive, which might not be sufficient for your aspirations.
Places to do crowdfunding:
There are different websites for crowdfunding, like Kickstarter, Indiegogo, and GoFundMe, where you can put your business up and ask for money.
Social media: Social media can be a powerful tool for promoting a crowdfunding campaign and reaching potential backers.
Personal networks: Businesses can leverage their personal and professional networks to generate interest and support for their crowdfunding campaigns.
Microloans loans, usually in the ballpark of a couple hundred to a couple grand, are meant for small biz owners or go-getters who might not be able to snag a regular ol' bank loan. Check out the pros, cons, and places to get these microloans below:
Access to funding for small businesses: Microloans provide small businesses with access to funding that may not be available through traditional bank loans.
Flexible repayment terms: Microloans typically offer more flexible repayment terms than traditional bank loans, allowing businesses to customize repayment based on their cash flow.
Support for entrepreneurship: Microloans can support entrepreneurship and economic development, particularly in underserved communities.
Higher interest rates: Microloans may have higher interest rates than traditional bank loans to account for the higher risk associated with lending to small businesses.
Limited funding options: Microloans may not provide sufficient funding for larger financing needs or for businesses with more complex financial requirements.
Qualification requirements: Microloan providers may have specific qualification requirements, such as minimum credit scores or business experience, which can limit access to financing.
Non-profit organizations: Many non-profit organizations, such as the Association for Enterprise Opportunity and Accion, provide microloans to small businesses and entrepreneurs.
Government agencies: The U.S. Small Business Administration (SBA) offers microloans through its microloan program, and other government agencies may offer similar financing options.
Online platforms: Online platforms, such as Kiva and Lendio, provide access to microloans from a variety of lenders and investors.
- Merchant cash advance
Merchant cash advance (MCA) is a type of financing where a lender provides a lump sum of cash in exchange for a percentage of the business's future credit and debit card sales. Here are some advantages, disadvantages, and sources of merchant cash advance:
Quick access to funding: Merchant cash advances provide quick access to funding, with many lenders able to provide funding within a few days.
No collateral required: MCAs do not require collateral, such as property or equipment, to secure the loan.
Flexible repayment: Repayment of an MCA is based on a percentage of future credit and debit card sales, meaning that repayment is flexible and tied to the business's cash flow.
High interest rates: MCAs typically have higher interest rates than traditional bank loans, making them a more expensive form of financing.
Hidden fees: Some MCA providers may have hidden fees, such as origination fees or processing fees, which can increase the overall cost of the loan.
Limited funding options: MCAs may not provide sufficient funding for larger financing needs or for businesses with more complex financial requirements.
Alternative lenders: Many alternative lenders, such as PayPal Working Capital and Rapid Finance, provide merchant cash advances to small businesses.
Independent sales organizations: Independent sales organizations (ISOs) may offer MCAs as part of their financing options.
Brokers: Brokers may connect small businesses with MCA providers, helping them to find financing options that meet their needs.
- Cash flow loans
Cash flow loans are loans that are based on a business's cash flow, which is the money that comes in and out of the business. Lenders use the business's cash flow as collateral for the loan, rather than requiring physical collateral like property or equipment.
Access to working capital: Cash flow loans can provide businesses with the working capital they need to cover short-term expenses or investments.
No physical collateral required: Because lenders use the business's cash flow as collateral, no physical collateral is required.
Quick approval and funding: Cash flow loans are often approved and funded quickly, allowing businesses to access the capital they need in a timely manner.
Higher interest rates: Cash flow loans often have higher interest rates than traditional bank loans due to the increased risk for lenders.
Shorter repayment terms: Cash flow loans often have shorter repayment terms, which means that businesses will need to repay the loan more quickly.
Strict repayment terms: Cash flow loans often have strict repayment terms, which means that businesses will need to make regular payments on time or risk defaulting on the loan.
Online lenders: There are a variety of online lenders that offer cash flow loans, such as Kabbage, OnDeck, and BlueVine.
Banks: Some banks also offer cash flow loans to businesses, although the approval process may be more stringent.
Small Business Administration (SBA): The SBA offers a variety of loan programs, including cash flow loans, that are designed to help small businesses access the capital they need.
- Business credit cards
Using business credit cards is a popular way for small businesses to get some cash. Let's get into the details of how business credit cards can help you finance your Shopify store. This includes the upsides, downsides, and a numbered list of sources:
Business credit cards are for businesses and have more features than regular credit cards.
Money is easy to access: Business credit cards give you quick access to funds to spend or invest.
You can pay back what you spend in a way that works for you: Business credit cards usually have flexible payment plans.
You can get rewards like cash or travel points: Lots of business credit cards have rewards, so you can get more for your money.
High interest rates: Compared to other types of funding, business credit cards can have high interest rates.
You might end up in debt: Since business credit cards are easy to use, it's tempting to overspend and get into debt. This can lead to money problems.
Limited credit availability: Business credit cards typically have lower credit limits than other types of financing, which may not be sufficient for larger investments or expenses.
Banks: Many banks offer business credit cards, which can be a convenient way for businesses to access financing through a trusted financial institution.
Credit card companies: Credit card companies such as American Express, Chase, and Capital One.
Your shop is good to go, but what's next? It all depends on your goals and business. Nonetheless, these solid pointers can give you a head start.
Remember, as we mentioned before, all financing options aren't the same. Some options may be better suited for your business needs. The ball is in your court now; spice up your store, make it appealing, captivating, and absolutely irresistible to attract more customers.Wanna take your online game to the next level? Check out Webinopoly! Our crew of tech experts will pull all-nighters to revamp your plain-Jane website and make it look boss. We'll hook you up with rad custom web design and savvy SEO strategies to make sure your site catches the eyes of your target audience. Plus, with our wicked e-commerce integration and mad social media marketing skills, we'll help you convert those views into sales. So why settle for mediocrity in the digital world? Let Webinopoly help you unlock your full potential and crush the competition!