3 Credit Strategies to Ramp Up Your E-Commerce or Retail Business

Selling products, whether in a retail store or online through an e-commerce business, often requires inventory and supplies. Unless you have plenty of cash available to pay for those products or supplies upfront, you’ll probably wind up using credit.

Here are three smart ways to leverage credit to ramp up your e-commerce or retail business.

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  1. Leverage a business credit card

Veronica Dailey saw an opportunity to sell chia seed products into the exploding health and wellness space, but wanted to act quickly. She launched, which sells organic chia-seed-based mixes that are plant-based and allergen-friendly, and used in smoothies, puddings and other recipes.

To get the capital she needed, she turned to her business credit card issuer, American Express.

“We used our business credit card to pay for shelf-life testing, bar codes, packaging, research and development and other similar startup costs,” Dailey said. She feels confident growing her business knowing that “our company can grow without having to scramble for additional financing.”

While many business owners think of business credit cards in terms of the perks they offer, such as cash back or travel points, they can also be a fast source of capital for your business. Interest rates tend to hover around 18 percent, but it is possible to get low rates through 0 percent APR promotional offers.

As an added plus, many small business credit cards report to commercial credit agencies, which can help you build business credit. Check out this list of which small business credit cards report to business credit bureaus.

Related: How This Entrepreneur Used Credit Cards to Grow Her Business

  1. Get supplier financing

Businesses that sell to other businesses (B2B) often extend payment terms. You may have heard of these as “net-30 terms,” which means the invoice is due 30 days after the date issued. Whether your business needs packaging and shipping supplies, components for your product, or supplies such as copy paper or cleaning products, there’s likely a vendor that extends terms.

Getting terms from your suppliers can give you time to produce and sell your product, then pay for that item out of revenues from sales. In other words, it can be a great way to help manage cash flow.

Supplier, or vendor, financing may even be available with no personal credit check, which means it may be available even to those with finance challenges. Some vendors will check a business credit report to rule out any “red flags” such as recent late payments, collection accounts, or tax liens. Depending on who you establish net terms with and whether they report to the major business credit bureaus, it can help you build a business credit score so you can get better net terms or interest rates on business financing options down the road.

  1. Get financing

Busy Baby Mat is the first-ever placemat that keeps baby toys in place. As inventor and business owner Beth Fynbo explains, it “ends the toddler toss” by using suction cups to keep the mat attached to the surface, and tethers to keep toys attached. She sells the placemat on her e-commerce website,

Fynbo used financing to manufacture the placemat and to pay marketing expenses to bring it to market. She was fortunate enough to secure low-cost funding to help her launch. In fact, her business was able to get two short-term no-interest, no-payment loans totaling just over $42,000.

The lenders in Fynbo’s case were both located in her home state of Minnesota: the Southern Minnesota Initiative Foundation and the Department of Employment and Economic Development (DEED).

“Most states and counties now have initiatives to help support building local businesses,” she said. “They aren’t advertised much, but if you look, you will find them!”

In addition to those funding sources, she took out a home equity line of credit.

Financing for your e-commerce or retail business may come from a variety of sources, including local banks or credit unions, as well as online lenders. There are pros and cons to each funding source, as you’ll see below:

Financing Source Pros Cons
Bank and Credit Union Low interest rates

Favorable repayment terms

Long application process

High credit scores often required

Online Lenders Fast approval process

Flexible credit requirements

Higher cost

Smaller financing amounts

Retailers and e-commerce stores are often offered a type of financing called a “merchant cash advance.” Technically not a loan, it offers an advance against future sales, based on previous credit and debit card sales volume. It’s typically a relatively expensive form of financing, but it can be obtained quickly and the owner’s personal credit is not likely to be a hurdle to getting approved. Keep in mind, though, that the cost of this financing is front-loaded; meaning you won’t save money by paying it off faster. Make sure you understand the cost and payment structure.

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Use these tactics wisely

Comparing financing offers can be frustrating as small business lenders currently do not have to disclose costs using an Annual Percentage Rate (APR). You may think the financing you are approved for looks inexpensive, but the actual cost expressed as an APR may be much higher. Free small business calculators, such as this one, can help you translate costs to an APR.

Leveraging credit to grow your business can backfire if you’re not careful, so make sure you have a plan in place before you borrow.

“Get all your ducks in a row before making your first business purchases,” Dailey recommends. “The sooner you can bring your product to the marketplace, the sooner you can start selling and making a profit to pay off your business debt. This means fewer interest payments along the way. Also, plan out every cost so you have a full understanding of how much your business adventure will cost.”

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