How eCommerce businesses can access funding to support growth

Ian Hawkins
3 minutes
Finance
How eCommerce businesses can access funding to support growth
In this article
  • A new kind of funding
  • What is a Merchant Cash Advance?
  • Final thoughts

Businesses are evolving to keep up with customer expectations. Some industry analysts say the pandemic accelerated digital uptake by five years almost overnight. For companies that have historically dragged their feet when it comes to digital adoption, the pace of change can be a head-spinner. 

In this environment, it’s important for businesses to build a solid digital strategy. Customers want satisfaction, speed and support, all of which can only be delivered through sound digital and logistical infrastructure. Getting it right is vital:

  • Satisfaction: brands with leading customer satisfaction rankings for three or more years grow revenues 2.5 times faster than their peers - Harvard Business Review

  • Speed: new research shows that customers are 2.4 times more likely to stick with a brand when their problems are solved quickly - Forrester

  • Support - loyalty is over: 32% of consumers say that even if they love a brand, they would go elsewhere after one bad customer experience - PwC

Customers have high standards when it comes to user experience, demanding that the things they want are easy to find, easy to order and easy to pay for. 

Whether you are a digital native or a newcomer to the eCommerce market, be prepared for your ideas to be challenged, and your business to undergo a transformation in which you reimagine the entire customer journey from start to finish. 

As your business scales, you may need funding to ensure you can offer a consistent service to customers. Wherever your customer is, you must ensure their experience is one they wish to repeat and recommend. 

This may seem daunting but here’s the good news: the financial market has evolved to provide funding products specifically designed to address this kind of change. 

A new kind of funding

Time was that if a business needed funding, the owner would go to the bank where they held their account and ask for a loan. If the bank said no, that was the end of the story. 

Digital transformation ushered in a new way of working: upstart, digital-first disruptor banks suddenly made the banking world move a lot faster. It used to be that people changed their bank accounts less often than they changed their spouses. Today, if you don’t like the bank you’re with, you can switch to a new business account in a few clicks. 

Open banking, which enables customers to securely share their banking data with accountants and service providers, has transformed the options available to customers, allowing lenders to offer highly tailored, specialised products that answer specific business needs. 

In an age where online sales can be tracked automatically across eCommerce platforms, products such as Merchant Cash Advances offer a flexible alternative to traditional loans. Those who use them find the repayment structure suits a business environment where things can quickly change, allowing for a more dynamic relationship between borrower and lender.

What is a Merchant Cash Advance?

A Merchant Cash Advance (MCA) is a lump sum provided by a lender that is repaid from customer card receipts. Repayments can be made at intervals of a day, week or month and are a fixed percentage of card payments, making them particularly attractive to seasonal businesses.  

As an MCA is not technically a loan, businesses that have been rejected for other types of borrowing may still qualify - so MCAs can be easier to obtain than traditional funding options and are an attractive alternative to a loan for businesses with few assets or a limited credit history. 

Any business that has customers online - be they sole traders, partnerships or limited companies - could find the MCA fits their funding needs. 

Final thoughts

Business owners who are looking to the future should consider what support they need in order to accelerate their digital transformation, deliver on customer expectations and achieve growth.   

Advancements in the fintech landscape have allowed lenders to offer finance products which are specifically tailored to the sectors they serve, and MCAs are just one example of the funding opportunities available to eCommerce businesses as they scale. 

Swoop is an Airwallex partner. To learn more about how Swoop can help your business get the right support, sign up here.

Related article: Compare UK business bank accounts

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Ian Hawkins
Head of Content, Swoop

Ian Hawkins is Head of Content at Swoop. As a freelance business journalist and filmmaker he has reported from Europe, Central and North America and Africa. His films and writing have appeared on BBC World, Reuters and CBS, and he has spoken at conferences on both sides of the Atlantic on subjects including data, cyber security, and entrepreneurialism.

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