Small Business Loans for Ecommerce Stores

The ecommerce industry’s rapid growth isn’t set to stop any time soon, but ecommerce store owners may still face revenue challenges. Although a September 2020 report by IBISWorld predicted that the industry’s 12.7% growth between 2015 and 2020 will only continue through 2025, supply chain disruptions caused by the COVID-19 pandemic could disturb ecommerce operations. Small business loans for ecommerce stores like yours can help with this gap.

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Small business funding can also help you keep up with the rapidly growing demand predicted in the September 2020 report. As your company receives increasingly more orders, you may need to expand your team or upgrade your equipment to maintain your usual delivery schedules and customer service infrastructures. These business decisions come with extra costs that low-cost funding options – including those listed below – can help you to afford.

Financing Options for Established Ecommerce Stores During the COVID-19 Coronavirus Pandemic

With COVID-19 case rates growing rapidly in March 2020, the White House and Congress passed the CARES Act, which introduced, among other initiatives, the Paycheck Protection Program (PPP). Through this Small Business Administration (SBA) 7(a) loan program, ecommerce stores and other small businesses could apply for stabilization or growth funding.

For updates on these efforts, visit the SmartBiz Small Business Blog, where you can also find information on loan forgiveness and opportunities. To learn how you can use any PPP loans that you previously acquired, visit the SmartBiz Loans COVID-19 information center, Small Business Loans & Resources in Times of Coronavirus (COVID-19).

Funding challenges and opportunities for ecommerce stores

Ecommerce stores face a bright future. The convenience of not leaving home to shop and the lack of traditional in-person retail experiences amidst COVID-19 stay-at-home orders have driven more people toward ecommerce as their source of goods. This trend is expected to continue long after the COVID-19 pandemic fades, as this shift began long before the crisis. In theory, this means a large potential customer base for your store.

On the other hand, the COVID-19 pandemic has disrupted the supply chain for several types of goods. If these goods are among your ecommerce store’s primary offerings, then properly stocking your inventory – a key ecommerce business need – becomes much tougher. As such, to continue reaching your prior revenue levels, you may either need to put money toward acquiring and selling new types of goods or emergency-ordering low-stock inventory. Both these pursuits may require more money than you usually have on hand, and small business loans for ecommerce stores can help you afford these costs.

Additionally, ecommerce stores operate in a crowded marketplace dominated by select giants who take up the lion’s share of the online market. Much investment needs to be made in marketing, search engine optimization, and advertising to compete against those giants -- investments that may be possible with a small business loan.

Funding options for ecommerce stores

Ecommerce stores can obtain funding through either the SBA or non-government sources. No two funding sources will have exactly the same approval rates and periods, but the below guidelines will give you an approximate idea of what to expect.

The SBA 7(a) loan program

Most experts consider low-cost SBA 7(a) loans the best small business funding option. These loans are excellent for ecommerce stores since they have low rates, low monthly payments, and long terms. Use your loans to:

  • Obtain Working Capital – Calculate your working capital by deducting your current liabilities from your current assets or tallying the cash you have readily available for business use. Negative working capital is a bad sign – working capital is perhaps the clearest indicator of your ecommerce store’s wellbeing. You can use SBA 7(a) loans to build working capital by expanding your team or purchasing new equipment.
  • Consolidate Your Debts – SBA 7(a) debt consolidation loans can go toward refinancing your ecommerce store’s current loans such as merchant cash advances, high-interest business loans, daily or weekly payment loans, or short-term business loans.
  • Lease Or Acquire Commercial Real Estate – All your wares need to be stored somewhere before they are sold. Some ecommerce operators may choose to lease warehouse space, while others may outright own their warehouses. Use a loan to purchase this commercial real estate or refinance on current commercial real estate.

Advantages of SBA 7(a) loans for ecommerce stores

The reasons for which lending experts near-unanimously agree that SBA 7(a) loans are the “gold standard” for small businesses are their:

  • Lack of prepayment penalties
  • Low rates
  • Affordable monthly payments
  • Availability in all 50 states
  • Wide use of funds
  • 10-year terms (25 years for commercial real estate loans)

Requirements for ecommerce stores to apply for SBA 7(a) loans

To qualify for SBA 7(a) loans, you and your ecommerce store must meet the below requirements:

  • Your store must be based in the U.S.
  • You must be at least 21 years old
  • Your store must be at least two years old
  • Your personal credit score must be greater than 650
  • You must have no foreclosures and bankruptcies within the past three years
  • You and your store must be on-schedule with all government-related loan repayments
  • Your store must not have outstanding charge-offs, recent settlements, or tax liens
  • You must be a U.S. citizen or lawful permanent resident

Some lenders will have additional provisions that others lack. For example, some lenders require business plans alongside loan applications, but SmartBiz Loans does not.


How to apply for an SBA 7(a) loan for ecommerce stores

Step 1: Verify that you meet all the above requirements. Learn more about these requirements via the SmartBiz Loans page SBA Loan Requirements for Existing Businesses.

To discover how your business financials stack up for funding, use our easy-to-use online tool. SmartBiz Advisor™ helps you track the financial health of your business and learn how banks typically evaluate your business.* SmartBiz Advisor also recommends ways to help you improve your credit and strengthen the financial health of your business as needed. Read feedback from real SmartBiz Advisor users and sign up here.*

Step 2: Gather all your required paperwork. This step can be time-consuming, so you may want to seek help from accountants, bookkeepers, or other financial experts intimately familiar with your ecommerce store. Learn more via the SmartBiz Loans Guide to SBA Loans.

Step 3:  Pick a lender for your SBA 7(a) loan. You should consider the following factors as you compare lenders:


A good lending experience involves a lending company representative whom you can reach regularly by email or phone. This representative should deeply know your application’s details, your ecommerce store’s distinguishing features, and the ins and outs of the commerce industry.

Positive reviews

Find your lender’s Consumer Affairs, TrustPilot, and Google review pages and read what’s there. What you see can help you decide whether the lender is a fit for your ecommerce stores. You should double-check that you’re reading reviews by real customers – bonus points if you can find other ecommerce store owners among the lender’s reviewers.


The two primary loan types you should see in your contract are interest and repayment fees. Too many fees besides these are usually a valid reason to choose a different lender. You should also confirm that all fees are due during your loan’s lifetime and before your loan’s funding.


A good loan should include clearly stated APRs and interest rates. A lender who attempts to obscure this information may be less inclined to explain all your loan terms transparently, and when it comes to money, you should always know as much as possible.

Obvious loan terms

On the note of transparency, the crystal-clear fine print is super important as well. Complicated fine print can hide unfavorable loan costs and payment schedules, so if you can’t understand what you see in front of you, ask for more information. Your lender shouldn’t hesitate to detail possible loan totals, collateral requirements, payment amounts and frequency, and prepayment penalties. If they do, search for other lenders.

The SBA 504 loan program

Through the SBA 504 loan program, you can apply for low-cost modernization or expansion funding. You can use SBA 504 loans to grow your team or upgrade your equipment.

Additionally, if your ecommerce store has goals overlapping with those of your local community development corporation (CDC), your SBA 504 loan and CDC can together cover 90% of your modernization or expansion project costs. 50% of this coverage comes from your SBA 504 loan, and 40% comes from your CDC. The remaining 10% falls to you.

The SBA microloan program

If your ecommerce store is a very small business (a.k.a. microbusiness) under the SBA’s definition, you can apply for the SBA Microloan Program. SBA microloans are at most $50,000 and can go toward all business costs except buying commercial real estate and paying debts.

Non-SBA loans and other funding options

SBA loans are often the best small business loans for ecommerce stores, but you still have other options. These funding routes may have shorter terms, larger payments, and higher rates than SBA loans. They include:

Bank term loans

Through bank term loans, you can access funding as quickly as through SBA loans and use your loan proceeds to obtain working capital or refinance your debts. When applying for bank term loans, you should ask prospective lenders about repayment terms, rates, potential loan amounts, and (if applicable) prepayment penalties.

Merchant cash advances

If your ecommerce store takes credit or debit card payments, you may qualify for merchant cash advances (MCAs). Through MCAs, a card company will provide you with a loan that you can repay by funneling a small portion of all your transactions back to your provider. Standard installment-based payment plans are also possible.

MCAs, while convenient, have one key drawback: Their APRs are extremely high. Learn more about MCAs via the SmartBiz Loans blog What You Need to Know About an MCA.

Business lines of credit

Through business lines of credit, you have access to a revolving line of credit of a maximum amount determined by your credit score. This amount is usually less than you could obtain through a bank term loan, but business lines of credit have a major advantage over bank term loans: Only the latter requires you to use your entire loan. With business lines of credit, you don’t have to use all your funds, and you’ll only pay interest on the money you actually use.

You can tap into your business line of credit as many times as needed until you use all your funding. You’re also unlikely to face the collateral requirements involved in securing other loan types. Learn more via the SmartBiz Loans blog Small Business Lines of Credit Pros and Cons.

Business lines of credit are like business credit cards since both are revolving lines of credit, but the similarities mostly end there. Business lines of credit expire after you use all their funds, but you can reuse business credit cards once you repay your loans. Additionally, business credit cards may include spending rewards unavailable with business lines of credit. Learn more via the SmartBiz Loans blog Finding the Right Credit Card for Your Small Business.

Why Choose SmartBiz Loans?

Need funding to rebuild your business? Don’t waste time going from bank-to-bank filling out multiple applications. SmartBiz helps you find the best financing for your unique needs whether that’s an SBA loan, Bank Term loan, or other financing.  About 90% of qualified applications we refer to banks are funded and our financial professionals are on hand to answer your questions. Discover if you’re pre-qualified here without impacting your credit scores** and read the SmartBiz 5-star customer service reviews on TrustPilot.

 *The information provided through SmartBiz Advisor, including the Loan Ready Score, is for educational purposes only. SmartBiz Advisor is not a financial or legal advisor as defined under federal or state law. Use of this information is not a replacement for personal, professional advice or assistance regarding your finances or credit history.

**We conduct a soft credit pull that will not affect your credit score. However, in processing your loan application, the lenders with whom we work will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and happens after your application is in the funding process and matched with a lender who is likely to fund your loan.

 What you need to know: The information provided through SmartBiz® University and the articles contained therein are for educational purposes only. Use of this information is not a replacement for personal, professional advice or assistance regarding your finances or credit history.