Where to get loans for a small E-Commerce business?

4 July, 2012

Those who wish to start a small E-commerce business must have faced the trouble of getting loans for their business. Usually the interest rates of banks are quite high and not affordable. Approval conditions are also very strict and online businesses usually do not qualify it. Luckily, alternative methods of obtaining small business loans in Australia are available.

Gather the funds from family and friends

If the initial funds you need are not very high, usually within a range of $10,000 to $50,000, then you might request a friend or a family member to help you. Make a proper plan of your business and you can show it to them and guarantee them a quick return of their invested money. Give them an approximate time supported by your business plan.  You can take the loan in installments and tell them your progress from time to time. Their interest in your business will make them feel comfortable in providing you loans.

Get in touch with angel investors

If the funds required are equal to or more than $100,000, you can contact angel investors too. For those who have never heard of them before, they are basically there to invest in a fresh business that is just starting up and they will support its gradual growth as well as expansion. The business they prefer should be at least one or two year old or the ideas must be realistic and promising. There are many websites on the internet that can help you in finding a loan for business. Ask relevant questions to know what exactly does your business angel wants. Also question them about the previous businesses in which they have invested. Decide the terms and conditions and the type of your agreement, schedule of repayment and how much share they expect from you. Talk about all of this before you accept the loan.

Incorporate your business so it can offer private placements

 Usually small businesses prefer incorporating to enjoy tax benefits and to get funds for expanding etc. They can control the person who can be brought on board etc. This way the small businesses can enjoy large raise in money in a very short span of time. The risk of a single investor who contributes all the money is also finished.

You can also apply for merchant cash advance

Applying for MCA is also a good approach. They will buy some percentage of your upcoming credit cards receipts at a discount of about 10% to 15%. The advance money they pay is basically based on how much high your credit card sales are and the amount of time your business have had. The approval rate is high and about three to seven days are required for its processing. Little paperwork is required. You can always apply at more than one bank but make sure to whichever bank you apply, you read the terms and conditions very carefully. Read it more than one time to make sure that no important point is missed as it might severely harm you later on.

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