Debt Financing vs Equity Financing for E-commerce Businesses
Explore e-commerce funding options for e-commerce businesses. Understand the various benefits and drawbacks of Revenue-Based Financing vs Equity Financing.
Receivables discounting is when you use your accounts receivable as collateral to borrow money.
The loan amount usually ranges between 80% and 95% of the receivables value, which you will pay back with interest and fees to the lender upon maturity.
In receivables discounting, you are not selling your accounts receivable. You simply use them to collateralize a loan. Therefore, you still own the receivables and are responsible for collecting payment from customers.
Here is an example of receivables discounting.
In this receivables discounting example, you will be given $20,000 x 85% = $17,000 upfront. This amount plus interest and fees will be repaid on or before due dates specified by the lender.
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Explore e-commerce funding options for e-commerce businesses. Understand the various benefits and drawbacks of Revenue-Based Financing vs Equity Financing.
Considering the financing needs of e-commerce, this article examines various funding options as well as their advantages and disadvantages.