Why Do Ecommerce Sellers Need Business Loans?

Posted by Team Finaxar on Mar 26, 2020 2:25:09 PM

Why Do Ecommerce Sellers Need Business Loans

In Singapore, the eCommerce industry is rapidly growing and is expected to reach 100 billion USD mark in just 5 years. With an annual growth rate of more than 9%, the expected revenue from this year is around 2.7 billion USD. Statistics show that Singapore is a popular market in Asia for the eCommerce industry.   

To keep up with this increasing growth, an eCommerce seller focuses his time and attention on scaling up his online business, be it through buying more inventory, improving variety or products, finding new sales or marketing channels. In order to keep the business running seamlessly, there’s a need for an ongoing cash flow. While some businesses have funds, there is a large number of small business owners who find it challenging to get financial support. Most SMEs are cautious when it comes to taking a business loan as they aren’t sure how a loan can really help them?   

Here are a few ways in which small business loans can help online sellers,

1. Increase sales by financing your inventory

When one’s online business is in the initial stages, the business owner might find that his receivables are not sufficient to match his payables, and this might finance his inventory using his own savings. This is very common amongst online sellers but if one’s business has been revenue-generating for at least 6 months and incorporated for at least one year, the online business owner may consider taking up a business loan. Business loans can help online sellers to stock up on more inventory and avoid using their personal savings for the business. When one’s inventory is strong, he can meet demands and have shorter shipping times, which will bring about customer satisfaction, greater loyalty and better sales.

2. Bridge short term liquidity gaps

Sometimes, customers can take up to 60 days to pay for some goods or services that online sellers are selling online. However, online sellers would still need to pay for expenses such as employee salary, and other bills on a monthly basis. This creates a cash flow gap that can be very unhealthy for one’s online business if it drags on. Hence, having a short term facility at hand that online sellers can draw-down to bridge these short term gaps will be very helpful.

3. Smoothen revenue fluctuations

For some online sellers, their products are seasonal or potentially affected by external events. For example, a winter clothes online seller will experience lower sales volume during the hotter seasons. While they can switch to selling light clothing for the hotter months, they might need some time. A business loan will be able to help with revenue fluctuations throughout the year due to seasonality or other reasons.

4. Finance business opportunities

For all online sellers, there are a few peak seasons that they should be aware of, such as mother’s day, mid-year sales, 11.11 etc. When a golden opportunity comes around, online sellers need funds to do extra marketing, stocking up and funding great deals for clients. Having a business credit line would enable online sellers to be able to draw-down anytime and participate in important sales events. This gives online sellers confidence and improves sales.

All in all, a short term business loan such as a credit line gives online sellers an advantage when it comes to financing inventory, bridging short term cash flow gaps, smoothening revenue fluctuations and financing business opportunities. Finaxar Credit Line is fast to apply for and can be approved within 72 hours, availing online sellers with up to S$200,000. Get in touch with our sales consultants to find out more!

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