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  • Writer's pictureEdgar Fernandez

6 Creative Financing Options For An eCommerce Acquisition

Updated: Mar 16

In the ever-evolving landscape of business financing, traditional loans are no longer the only option for entrepreneurs looking to scale.

Today, we're diving deep into some of the more innovative and lesser-known financing strategies that could be pivotal for your eCommerce business's growth or your next M&A transaction.

From leveraging your inventory to engaging in seller financing and even exploring sponsorships, there's a world of possibilities out there.

Before that, for those considering these options, ASE's comprehensive resources, including the highly acclaimed Pre-LOI checklist, are invaluable tools for your journey, and keep you from waisting time, energy, and money on bad deals.

But a checklist can't really replace a mentor. If you want to close eCom deals with a 9-figure PE founder, check out this great training.

1. Inventory Financing: Unlocking the Potential Within

Inventory financing is a powerful tool for businesses with significant funds tied up in stock.

It allows you to borrow up to 80% of the value of your inventory, providing much-needed liquidity for other operational needs or growth initiatives.

However, it's crucial to approach this option with caution.

Before you leap, take a moment to calculate the carrying costs associated with your inventory.

The goal here is to ensure that these costs don't surpass the benefits of financing the inventory itself.

It's a delicate balance, but when done right, inventory financing can be a game-changer.

2. Seller Financing: A Win-Win Solution

Seller financing is an often-overlooked strategy that can benefit both the buyer and the seller in a business sale.

In this arrangement, the seller essentially extends a loan to the buyer, who then repays the amount from the cash flow generated by the business.

This method not only helps buyers secure the necessary funds to close the deal but also offers sellers significant tax advantages by spreading out capital gains tax over several years rather than incurring a large lump sum tax payment.

It's a win-win situation that fosters smoother transitions and maintains business continuity.

3. Leveraging Sponsorships: With Your Email List

For direct-to-consumer (DTC) businesses, the power of sponsorships can be a game-changer.

While this might not be applicable to Amazon-centric businesses, DTC enterprises can harness their packaging and digital presence as advertising spaces for sponsors.

Inserting flyers in packaging, sending out sponsored emails, or utilizing web traffic for promotional activities can open up new revenue streams and provide additional funding for your business's growth initiatives.

4. Inventory Consignment

Consigning any form of assets to a buyer is usually a safer option than seller financing for both parties.

In this case you can consign inventory over to the seller, this means that they own the inventory post close and you pay them for it after your other financing kicks in.

5. Revenue Based Financing Post-Close

If you have an eCommerce store in the US with over $100k in lifetime sales and over $8k in monthly sales for the last quarter you qualify for the below program that finances 90% of your COGS.

6. Business Credit

Depending on the age of your business entity, you may qualify for different business credit building programs.

Dive Deeper with ASE's Resources

Exploring these financing options can be a daunting task, but you're not alone. ASE offers a plethora of resources designed to guide you through the complexities of business financing.

A standout among these is the Pre-LOI checklist, a favorite among the ASE Fleet and customers alike.

This tool is tailored to help you navigate the preliminary stages of a deal with confidence, ensuring you're fully prepared before the Letter of Intent (LOI) stage.

As you consider these innovative financing strategies, remember that each business's needs are unique.

What works for one may not be suitable for another.

It's essential to evaluate your specific situation, goals, and the potential implications of each financing option.

For those ready to take their business to the next level, exploring these unconventional financing strategies could unlock new growth opportunities.

And with ASE's resources at your disposal, you're well-equipped to make informed decisions that align with your business's long-term vision.

Don't hesitate to delve into ASE's wealth of knowledge and tools, including the invaluable Pre-LOI checklist, to empower your business journey.

The path to growth is multifaceted, and with the right strategies, your business can thrive in today's competitive landscape.

Stay tuned for more insights and strategies by following our blog.

And if you're ready to explore how these financing options can benefit your business, ASE is here to help.

Reach out to us or check out our resources for more information. Happy deal-making!

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