E-commerce funding in the UK: why the usual options fall short
Most online brands start on founder cash, then move to merchant cash advances because they are fast and the provider plugs straight into Shopify or Amazon. That works for a first step. As the business grows, the advances get bigger and more frequent, the effective cost climbs, and a large share of daily sales goes on repayments rather than the next stock order.
Banks, meanwhile, tend to lend on filed accounts and property. A brand that reinvests every pound into stock and marketing can show thin profits, hold no freehold, and keep its stock in a warehouse it does not own. On paper it looks weak. In reality it may have strong contribution margins, loyal customers and monthly revenue that supports far more funding than the overdraft it has been offered.
The right structure for a growing online business usually combines a stock facility sized on revenue, a way to pay suppliers, and longer-term money for growth, all sized from the live data rather than last year's accounts.
Revenue-based stock finance for Amazon sellers and D2C brands
E-commerce stock is not funded like a retailer's or a distributor's. There is no independent appraisal and no advance against liquidation value. Instead, the lender sizes the facility on your sales: monthly revenue, its trend, margins and how fast stock sells through. You draw to buy stock, and the facility is repaid from sales as that stock sells, so the money comes back in step with the revenue it creates.
Because the facility is sized on revenue, it grows as the brand grows, and it does not matter whether the stock sits in your own unit, a 3PL or Amazon FBA in the UK and Europe. Lenders connect read-only to Shopify, Seller Central and your payment processor, which means a decision can be made on live trading and the limit reviewed as sales rise.
Which brands it suits best
Brands with consistent best-sellers, repeat purchasing and steady monthly revenue get the most from a revenue-based stock line: consumables, supplements, pet products, homeware staples and branded goods. Brands with very lumpy sales, short product lives or high return rates can still be funded, but the lender will look harder at sell-through and returns. Good SKU-level reporting makes a real difference to the limit.
Purchase order and trade finance for overseas manufacturing
If your products are made in Asia or Europe, the biggest cash drain is usually the production cycle. Purchase order and trade finance is a separate facility that pays up to 100% of the manufacturer's deposit and balance, and covers the goods while they ship, giving you up to 180 days before repayment. Once the stock lands and starts selling, the revenue-based stock line takes over.
Lenders want to see an established supplier relationship, clear specifications and quality checks, and a track record of the products selling. Paying suppliers on time and in full often earns better unit costs, which can go a long way towards covering the cost of the facility.
Funding marketing spend and refinancing cash advances
Marketing is best funded from a committed revolving credit facility, priced from 2.5% over Bank Rate on drawn funds, drawn to scale a proven campaign and repaid as the cohort pays back. The risk with merchant cash advances is stacking several at once, which can take a large share of daily takings and leave little for stock.
Where a brand has outgrown advances, we usually refinance them onto a term loan from 6.5% a year, on terms of 1 to 10 years and unsecured up to £2m, or into a wider structure with a predictable repayment. For marketing, lenders look hardest at your customer acquisition cost, payback period and repeat rate. A brand that can show customers paying back their acquisition cost within a few months, and returning to buy again, is in a strong position to fund growth with debt rather than equity.
What makes an online brand fundable
You do not need all of this in perfect order before you call. We help shape the data into what lenders expect, write a credit paper that explains the business in their language, and approach the lenders on our panel with genuine appetite for e-commerce.
- Clean monthly management accounts that tie back to the platforms
- Monthly revenue and contribution margin by channel, after fulfilment, fees, returns and ads
- SKU-level stock and sell-through reporting across every location
- Cohort data showing repeat purchases and CAC payback
- A realistic cash flow forecast that includes payout timing and reserves
- No reliance on a single marketplace account for most of revenue
Growth Guarantee Scheme loans, acquisitions and buyouts
The government-backed Growth Guarantee Scheme, up to £2m per business group with a 70% guarantee to the lender, can help a lender support an online brand with limited hard security, for a new warehouse, systems, a product launch or refinancing short-term debt. The business remains fully liable for the loan, and the lender still needs to see that it is affordable from trading. We will tell you early whether it is a realistic route for your business.
We also advise on transactions. Brands buying a competitor or building a group of brands, founders selling to management, and investors recapitalising a business all need debt structured around the deal. We run the debt process end to end, with acquisition debt of up to 5x EBITDA where the earnings support it.
Funding for subscription brands and marketplace payout timing
Subscription brands have a particular strength: predictable recurring revenue. Lenders who understand the model look at monthly recurring revenue, churn by cohort and the lifetime value of a subscriber against what it cost to acquire them. Where churn is stable and cohorts are well documented, a revenue-based facility can be sized generously, which suits brands that ship small, frequent orders from lean inventory.
Payout timing matters for every online seller. Amazon and other marketplaces pay on a cycle and can hold reserves against returns, A-to-z claims and disputes, while card processors may keep a rolling reserve on newer or faster-growing accounts. We build that timing into the cash flow forecast so the facility is sized for when cash actually arrives, not when the order was placed.
Selling into retailers and wholesalers
A first big retailer or wholesale listing usually means a large order on 30 to 90 day terms. Those invoices can be funded through invoice finance at up to 90% of eligible invoices, with funds within 24 hours of invoicing, and once the facility would be £2m or more, through asset based lending on the receivables, priced from 2% over Bank Rate. The D2C side of the business keeps its revenue-based stock line, so each channel is funded the way it actually trades.