The Top Business Loan Options for eBay Sellers

Updated on November 18, 2020
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Getting a Business Loan as an eBay Sellers

While eBay might have started out as a simple online auction site, it’s now a diverse and powerful marketplace for all sorts of ecommerce businesses. If you do a lot of business on this platform, you might be looking into business loan options for eBay sellers. It’s a good idea, since the right financing can help you grow your business and enable you to right the ship if you’re encountering any problems.

How do you figure out which is the best business loan to address your eBay business financing needs? We’ll go over the best business loans for eBay sellers, so you can decide which type of financing is best for you. We’ll also review what to consider in picking the loan that is best for your needs as well as the documentation you’ll need to apply and get approved.

The 5 Best Business Loans for eBay Sellers

There are several different types of business loans that you can look into for financing your eBay business. Here, we’ll review some of the best options that are particularly helpful for eBay sellers looking to grow their businesses. As you read through these options, pay particular attention to their use cases and how quickly you can get ahold of the funds—that will help you figure out which of these loans is right for your needs.

  • Business Line of Credit

    One of the most popular types of business loans for eBay sellers is a business line of credit. This is a favorite since it’s so flexible—you can use the financing for just about any business-related expense.

    A line of credit is a type of business loan that works a little bit like a business credit card. You work with a lender to get approved for a certain amount of financing, and then you can “draw” against the line to use what you need. You don’t have to use all of it at once, and you only pay interest on what you use. This can be a huge benefit to business owners who need access to financing but don’t want to pay interest on a lump sum. Many business lines of credit are also “revolving,” which means that once you pay back the amount you’ve used, you have access to the full line of credit again.

    A big difference between business lines of credit and business credit cards is that lines of credit enable business owners to access more capital and generally at a lower interest rate. So, if you like the way a business credit card is set up but want to be able to access more money at a lower premium, a business line of credit can be a great decision.

    Requirements for business lines of credit vary, but even eBay business owners without lots of time in business or revenue may be able to qualify. You can also get fast approval if you’re qualified—sometimes in as little as a day.

  • Term Loans

    Among the eBay business loans that could be a fit for your company are business term loans. These loans are what you’d think of as a “traditional” business loan wherein, after you get approved, you receive a lump sum of cash deposited into your business bank account.

    These loans are flexible working capital loans, which means that you can use the financing for a variety of business purposes. That can include overhead, inventory, and more.

    Short-term business loans have a repayment period of up to about a year. Compared to other term loans, short-term business loans are a bit easier to get, especially for business owners who don’t have a perfect financial history or a ton of time in business to show lenders. The tradeoff, however, is that these loans generally have higher interest rates than other term loans with longer repayment periods. Still, they’re quick to finance and offer a larger range of business owners options.

    There are also other term loans, which give entrepreneurs access to longer repayment periods and higher capital amounts. These medium-term business loans generally offer repayment periods of up to five years; the terms a lender would offer you depend on your creditworthiness and business history. Note that medium-term loans are a bit harder to qualify for versus short-term loans because of their more preferable terms, but are still attainable for many eBay business owners.

  • Inventory Financing

    Physical inventory is a big part of running an eBay business. Whether you sell vintage clothes, sporting goods, electronics, or something totally different, you need to make sure that your store is stocked. In that case, you might want to look into inventory financing, which is a small business loan meant to finance the purchase of inventory.

    It’s worth noting that inventory financing usually comes as a business line of credit or term loan (both discussed above), so it’s not exactly a “type” of financing itself. But it is a specialty loan whose sole use is to purchase inventory. You won’t be able to use inventory financing to make payroll or fund a marketing campaign. The good news is, the inventory that you purchase will also serve as collateral for the loan, which may make it easier to qualify for.

    Lenders may have minimums for the amount of financing they’ll provide, so these loans aren’t just for adding a few items to your store. But if you are looking into financing a significant amount of inventory, this could be a great business loan option for you. You’ll want to check in with your lender to find out their minimums.

    It’s worth noting that because there’s a long due diligence process, inventory financing isn’t the fastest loan you can get.

  • Business Credit Cards

    A business credit card shouldn’t be counted out as a useful financing tool to help you sell on eBay. Even if you’re a solopreneur, you can still apply for and use a business credit card to finance your business needs. This could include things such as shipping fees, marketing, inventory, and more. And, as you might expect, there’s a range of business credit cards for entrepreneurs in all different types of financial situations—even those with fair credit.

    Some credit cards—known as 0% introductory APR business credit cards—enable cardholders to spend without interest for a predetermined period of time. Over this period (sometimes as long as a year), you won’t pay interest on your balance, so you can purchase some larger-ticket items upfront and pay them off interest-free over time. Note that after the intro period is over, a variable interest rate will kick in based on your creditworthiness and the market Prime Rate.

    If you need capital quickly, a business credit card can be a great option to explore. It might not offer access to the same amount of capital that other business loans do, but if time to funding is important, you’ll want to consider it.

  • Personal Loans

    If you find that you don’t have the business collateral to guarantee your business loan, you’re not alone—many entrepreneurs, especially those in nascent stages or who don’t generate significant revenue, aren’t able to secure a loan with business assets. If that’s the case for your eBay business, you might want to look into a personal loan for business.

    These loans are secured by your personal assets instead of your business assets. The capital amounts aren’t as high as they are for business loans, but if you’re not able to access traditional business loans due to your time in business or revenue numbers, it can be a viable solution.

Picking the Right Loans for Your eBay Business

Now that you know the best loans for eBay sellers, the next step is to figure out which of these options is best for you. The best way to do this is to evaluate the following components of your business and your needs:

  • How much capital do you want? Some loans offer higher capital amounts than others.
  • How is your cash flow? Some loans are specifically designed to help solve cash flow problems.
  • What is the timeline that you’re comfortable paying back your loan? Some loans have longer repayment terms than others.
  • What are you looking to finance? Some loans are designed to provide working capital (flexible financing for business needs) and others are meant to finance specific assets (like inventory financing).
  • What are your qualifications? Factors including time in business, credit score, and revenue will affect which loans you’re qualified for. And remember that the stronger your financial profile, the better loan terms you’ll receive.

These aren’t the only questions that you’ll need to ask in order to figure out which loan is the best for you. But understanding the answers to these questions can help you evaluate your options and decide which loan is realistic for you based on your qualifications.

Applying for eBay Business Loans

No matter which eBay business loan that you apply for, you’ll need to prepare some documentation so lenders can evaluate your candidacy. Specific requirements will depend both on the lender with whom you work and the type of loan for which you apply. Even though that’s the case, there are some documents that most lenders ask for that you might want to pull in advance of your application. This can help speed up your application process, which could be especially helpful if you’re in a rush to get your financing in hand.

These include:

  • Personal identification
  • Three to four months of business bank statements
  • Two years of business tax returns
  • Two years of personal tax returns
  • Financial statements, including balance sheet and profit and loss statement
  • If applicable, quote for equipment or inventory

The Bottom Line

Just like any other type of business financing, the best loan for your eBay business depends on exactly what your needs are. Remember to take into consideration what you need to finance and how quickly you need to be able to access the capital.

Even if it takes a little time to match yourself with the best loan, just keep in mind that there are multiple business loans for eBay sellers, and it’s worth the work to find the right financing for your unique needs.

Meredith Wood
GM, New Markets at NerdWallet

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a GM at NerdWallet.

Meredith launched the Fundera Ledger in 2014. She has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending and financial management.

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