Best Practices for E-Commerce Business Loans

Published on January 4, 2022
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Filed under Selling Channels
Read time 6 Minutes

This post is contributed from Madie Hodges, Content Writer at Kabbage. Kabbage allows businesses to use their own data to get access to the funds they need to grow, all-online, and within minutes.

Small business loans can be really confusing, and one of the biggest inhibitors to the growth of any business is finding and obtaining funding. Choosing the right type of financing and getting approved can take weeks and sometimes even months. But small business owners often need financing right away for the survival of their business. It’s important to know what your options are and how to approach getting a loan for the greatest success. When seeking a business loan, these are the best practices for getting approved.

Research lending institutions

There are many different loan programs for small business owners, so spend time to researching which type of loan would be best for you and your business. The Small Business Administration (SBA) was specifically created to help small businesses obtain financing so they can scale and grow. You can read in-depth information about all of the programs offered through the SBA at no cost. Look into different types of funding like crowdfunding, peer-to-peer lending, traditional loans, merchant cash advances, and lines of credit as well as different loan terms.

Create a financial profile

Once you have decided which funding options are viable for you, create a financial profile that explains your current financial situation, your financial history, and any other relevant information that a lending institution would want to know about you and your business. This includes a business plan, your personal credit report, income records, tax forms, your resume, proof of collateral, and bank and credit card statements. You can also download and fill out a basic loan application to show your loan officer that you are serious and prepared.

Think ahead

You are much more likely to get approved for a loan if your lender can tell that you are serious about paying it back. In fact, traditional lenders typically verify two sources of repayment before approving any loan. Come prepared to prove that you have options and/or collateral to back up the risk the lender is taking on. Write out a detailed repayment plan that also lays out possible alternatives just in case. Creating a payment plan proves that you are a responsible and viable candidate to potential lenders.

Understand the lender’s risk

Taking a loan raises huge potential risks to both you and the lender. When lenders size up potential borrowers they evaluate them on a risk scale. Understanding this scale and how you match up can be extremely helpful when seeking loans from different lenders. Someone is deemed a risky borrower if they have too little owner’s equity in a business, have poor earnings, low-quality collateral, questionable management, are a newer company, have poor accounting systems or have low, slow or past-due loans or credit history. These candidates are not likely to be approved for a loan, so research your own financial history to see if you would be considered a risky asset.

Improve your personal credit

Although you are seeking a small business loan for your eCommerce store, you hold all the risk, so lenders will look at your personal financial history as well. It’s okay If you have a rocky credit past as long as you work at gradually improving your personal credit over time. If a lender can see a steady increase in your financial records, you are more likely to get approved. The best way to improve your personal credit is to pay down personal debts and credit cards as much as possible. This is extremely important, as most business loans will have to be personally guaranteed.

Seek advice

Small business lending is a tough terrain to navigate, so don’t do it alone. The Small Business Administration has local offices in every state and most big cities and they offer free advice, webinars, workshops, and mentoring programs.


Getting a small business loan can seem completely overwhelming, but if you do your research and prepare properly, you can save a lot of time and energy. There are numerous funding opportunities for your business, so get out there and explore your options!

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