10 Ways eBay Sellers Can Get Funding

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Most of us think of eBay as a means to make a little extra cash on the side (although others may consider it only as a place where we can order those elusive early 90s-era Ninja Turtles action figures we’ve been looking for). The truth is, if you’re inclined to get serious on the selling side, eBay can be so much more. Some folks have managed to leverage their eBay seller’s accounts into $25-million-dollar-a-year businesses. But you can’t achieve anywhere near this level of success as an eBay seller without some capital injection.

In some ways, an eBay business is like any other business, so the usual methods of funding a start-up apply. However, there are some funding avenues that particularly suit online vendors. Let’s explore the ways you can secure capital for your eBay business.

1. Use Your Own Assets

According to the nonprofit association SCORE, 57% of small business owners use their personal savings for startup capital. You may not be eager to sink your own money into something so inherently risky, but that’s what most entrepreneurs end up having to do to get their businesses up and running, and eBay sellers are no exception. It’s not an ideal funding solution, but there are few ideal solutions in our fallen world.

Odds are you don’t have thousands of dollars just lying around, so where can you raise the capital? In addition to simply selling your own possessions, you could get a home equity loan or line of credit. Or you could borrow money from your 401(k) or your IRA savings account.

Yes, I realize that mortgages and retirement accounts are resources many would-be entrepreneurs don’t have or can’t fall back on. However, if you possibly can, try going the bootstrapping route. One benefit of investing your own resources in your eBay business is that you may have an easier time securing funding in the future. Lenders and investors like to see that you’ve got skin in the game, so to speak.

2. Friends And Family

Speaking of non-ideal funding solutions, you can always seek capital from friends and family. While you’ll want to think long and hard about whether you want to risk your personal relationships in the pursuit of start-up capital, there are undeniable benefits to this approach as well. For one thing, your Uncle Oscar isn’t likely to scrutinize your creditworthiness to the same degree that an actual lending institution would. Neither is he likely to charge the same amount of interest.

Just make sure that if you do secure funding this way, you get a loan and not equity investment. After all, you don’t necessarily want good ol’ Oscar having the legal right to be involved in company decisions, which is what he’ll have if he provides equity investment. Be sure to go through all the proper legal channels and make sure the paperwork is prepared by professionals.

3. PayPal Working Capital

One lender with obvious fluency in eCommerce is PayPal. PayPal Working Capital (see our review) offers loans that resemble merchant cash advances — after taking out the loan, you’re charged a one-time fixed fee. Paypal then takes a daily deduction of a percentage of your PayPal sales until you’ve paid off the loan and the fee, so long as you pay at least 10% of your loan every 90 days. If you fall behind on this, you’ll have to make catch-up payments. The maximum term length is 18 months.

PayPal review
Borrower requirements:
• In business at least 3 months with either $20K in annual revenue (for a PayPal Premier account) or $15K in annual revenue (for a PayPal Business account)
• No credit score requirements
Visit the PayPal Working Capital website

PayPal Working Capital has obvious advantages for the eBay seller. Your PayPal sales history is what determines whether you’ll get the loan, so when you apply, there’s no hard credit check and no effect on your credit score. You’ll just need a PayPal Premier or Business account that’s at least three months old and that processes at least $15K a year with a Business account (or $20K/year with a Premier account).

With an APR that tops out at around 25% (and no interest), PayPal’s terms are pretty reasonable for a short-term lender. Click here to read our full PayPal Working Capital review.

4. Kabbage

Kabbage (see our review) is a small business lender that specializes in providing capital to online merchants. In fact, the company once dealt solely with online vendors, but have now expanded to brick-and-mortar businesses as well.

Borrower requirements:
• Must be in business at least 12 months and make at least $50,000 annually (or $4,500 for the last 3 months).
• No specific credit score requirements.
Visit the Kabbage website

Kabbage loans are offered as lines of credit. These lines can range from $2K to $100K. Each draw on this line of credit is an installment loan with a term of 6 or 12 months. The APR can be steep, though — rates typically range from 18% to as high as 102%.

Though Kabbage will take your credit score into consideration when assessing your application, they’re more concerned with your business’s profitability. To this end, they require you to have been in business for at least a year and have generated at least $50K in annual revenue (or $4,200/month over the last three months).

When you apply for a Kabbage line of credit, you give Kabbage access to your PayPal and eBay accounts so they can assess your sales profits and your credit. If you are approved, the money will be deposited directly into your PayPal account. Bear in mind that your PayPal account is connected to your bank account, so if you’re delinquent in paying back the loan, Kabbage will withdraw the funds directly from your bank account. Ouch.

Given the fact that you can apply for a Kabbage loan, get a decision, and start withdrawing funds within minutes–and considering the company’s integration with PayPal and eBay–this is a convenient way for established high-volume eBay sellers to access a significant amount of capital very quickly. However, small-time sellers will find the high borrowing cost extremely onerous. Convenience is expensive.

Read our Kabbage review to learn more.

5. OnDeck

If your eBay business is in need of some leniency from a lender, take heart—OnDeck (see our review) is one of the most lenient lenders you’ll find. Offering short-term loans and lines of credit, OnDeck has relatively low borrower requirements:

Borrower requirements:
• Must be in business at least 12 months with a revenue of $100,000 per year.
• Must have a personal credit score of 500 or above.
• Must not be in one of OnDeck’s restricted industries.
Visit the OnDeck website

OnDeck offers short-term loans up to $500K, and lines of credit of with credit facilities up to $100K.

The equivalent APR can be as high as 98%, so OnDeck’s loans are on the pricey side. But if your eBay business needs a capital injection, OnDeck is worthy of consideration (especially if you aren’t eligible for less expensive financing). Read our full OnDeck review here.

6. Merchant Cash Advances

A merchant cash advance (MCA) isn’t a loan—it’s a purchase agreement. The MCA company is purchasing future revenue from your business at a discount. You’re advanced a lump sum up front, and the MCA company collects their “purchase” by deducting a fixed percentage of every sale. Because repayment is based on your sales, the MCA company will be collecting more money when sales are high, and less money when sales are low.

Because MCA companies are typically more concerned with cash flow than creditworthiness, bad credit likely won’t prevent you from obtaining an MCA for your qualified business.

Be warned, though: with a merchant cash advance, your equivalent APR could be as high as 350%! What’s more, the merchant cash advance industry is not federally regulated, as the product is considered a commercial transaction and not a loan. So while qualified eBay sellers may find it simple and easy to obtain MCAs, there are dangers. Caveat emptor.

Read more about MCAs here, or check out merchant cash advance comparison page to see a comparison of some of our favorite services.

View our Merchant Cash Advance Comparison page

7. Lending Club

Lending Club (see our business loans review) is one of the few online loan companies that offers personal and business loans. While both can be used to fund your eBay business, their terms differ. Lending Club’s personal loans have a maximum borrowing amount of $40K, and business loans have a maximum of $300K. The following are the borrower requirements for Lending Club’s business loans:

lending club logo
Borrower requirements:
• Must be in business at least 12 months with a revenue of $50,000 per year.
• Must have fair personal credit.
• Applicant must own at least 20% of the business.
Visit the Lending Club website

As P2P lenders such as Lending Club tend to be more risk-averse than the other types of lenders mentioned above, you’ll need decent credit to obtain a loan. A credit score of at least 640 is required.

Between their personal loans and business loans, you may well be able to secure at least some funding from Lending Club if you have decent credit. However, if you’ve got both decent credit and a business track record of two years or more, you should be able to get your hands on a much more substantial amount.

If you’re interested, read our Lending Club business loans review and personal loans review.

8. StreetShares

StreetShares (see our review) is a peer-to-peer (P2P) lender in which potential investors compete for the opportunity to loan to you, potentially lowering your interest rate in the process. Aside from that distinction, StreetShares also stands out in that it was founded by veterans and is therefore known to be especially veteran-friendly (you do not need to be a veteran to qualify for funding, however).

Borrower requirements:
• Must be in business at least 12 months with a revenue of $25,000 per year (sometimes StreetShares will make exceptions for high-earning businesses at least 6 months old).
• Must have a personal credit score of 620 or above.
Visit the StreetShares website

To qualify for a StreetShares loan or line of credit, you’ll need to have been in business for one year — though if your business has already made $100K, you can qualify with only a six-month business history. You can borrow from between $2K and $100K with term lengths from 3 to 36 months. Repayments are made via weekly ACH withdrawals.

StreetShares’s unique structure, which can result in an APR lower than loans from immediate competitors, make it an intriguing option for the online vendor. Read our full StreetShares review if you’re interested.

9. Kiva U.S.

Kiva U.S. (see our review) is a nonprofit crowdfunder with one particularly attractive feature for the eBay seller just starting out: 0% interest loans! When they say they’re a nonprofit, by gum, they mean it!

kiva logo
Borrower requirements:
• Must use the proceeds for business purposes.
Visit the Kiva U.S. website

With Kiva, you can only borrow up to $10K and, because its a crowdfunding service, it can take up to two months to get your money. Therefore, Kiva loans may be impractical for established sellers who need more funding and/or fast access to cash. For those of you just beginning to sell on eBay, however, Kiva U.S. is a uniquely attractive way to get a little interest-free startup capital.

Read our Kiva U.S. review to learn more about these folks.

10. Bitbond

If you’re not squeamish about looking into a truly non-traditional lender for some startup funds, you could try Bitbond. As their name suggests, Bitbond uses bitcoin as a payment network. This allows Bitbond to be a truly global P2P lender, and as the banks are eliminated from the process, the platform is relatively cheap as well.

When you apply for a Bitbond loan, you can connect your eBay account, and Bitbond’s algorithm will quickly assess your creditworthiness. With loans up to $10K, low interest rates of 1% to 4%, an average APR of 13%, and a focus on online vendors, Bitbond is a fresh and intriguing prospect for the eBay seller.

You may associate Bitcoin with smug anarcho-libertarians engulfed in vape clouds. If you’re reluctant to dip your toes into something based on Bitcoin, by all means, do your research. Feedback on Bitbond’s Trustpilot page is split, though the complaints are largely from lenders, not borrowers — and it’s borrowers we’re concerned with here! Visit Bitbond’s website for more information.

Final Thoughts

It’s not easy for traditionally-structured companies to secure business funding at all these days, much less eBay ventures, because the big banks simply don’t know how to treat online vendors. Thankfully, the last decade or so has seen a plethora of new online funding mechanisms arise to meet the demands of people thirsty to leverage the power of the internet to build thriving businesses.

Do your due diligence before borrowing from any source; compare all these solutions and more, because only you can determine what’s most appropriate for your particular needs. Good luck!

Jason Vissers

Jason Vissers

Jason Vissers is a writer, cereal chef and Netflix aficionado from San Diego. A native Californian who enjoys the beach, Jason nonetheless prefers to do his surfing on the World Wide Web, the raddest wave of them all. Jason can't eat raisins.
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