Starting Guide for eCommerce Business Grants & Loans

So for government grants, you may have better luck looking at the state and local level. The Economic Development Directory page won’t lead you to grants directly, but it does have a searchable and clickable map, by state, that will connect you with a number of local resources. 

Small business loan resources

You just need a little help knowing where to look. And for that, you’ve come to the right place. 

What are small business grants and loans?

Access to financing can fortify and fuel your growing business, helping you expand and scale more quickly. With fast, flexible financing, WooCommerce + Stripe Capital enables U.S.-based companies to invest in growth and stabilize cash flow.  

Suppose one day you make $900 in revenue, and the next day you make $1,300. Your payment on the first day (assuming a 12% payment) would be $108, and on the second day, it would be $156.

A small business grant is essentially free money. It means you don’t have to pay it back, ever. However, most grants come with stipulations and restrictions regarding who can win the grant, and how the money will be used. They also usually have a cumbersome application process, and the IRS generally considers a grant to be business income, which means that it’s taxable. 

The process for applying for a business loan depends heavily on which type of loan you’re pursuing. 

Isn’t it great how revenue-based financing works? It would feel more or less like a sales tax, except in this case, once the loan is paid off, the payments end. Learn more about Wayflyer’s model and read their FAQs.

Types of small business grants

Unlike many loans offered through traditional banks, WooCommerce + Stripe Capital charges one fixed fee, and that fee never changes. That means there are no interest charges or late fees for you to worry about. Repayment also happens automatically, through a fixed percentage of your transactions, and adjusts to your daily sales. A fixed percentage will continue to be deducted until the total owed is repaid.

And as mentioned already, you can use Fundera for a huge variety of bank and institutional loans, mostly of the debt-based variety, and Wayflyer if you want a revenue-based loan for eCommerce businesses. Additionally, you may receive an offer automatically from WooCommerce if your business qualifies for a WooCommerce + Stripe Capital loan.

Go get ‘em!

But within those categories, you can find some variations. Most loans come from banks, but some can be given through the government, and others from specialized private businesses. 

In general, there are two types of grants: government grants and private grants. Private grants usually come from businesses or foundations. 

With WooCommerce and Stripe, loan offers are extended by Stripe’s banking partner, Celtic Bank, based on factors such as your store’s sales and history with WooCommerce Payments. There’s no lengthy application process and no consumer credit check.

A typical debt-based business loan with monthly interest payments comes with more risk, because what happens if you can’t make the payments? But, it lets you retain ownership. See more information about the pros and cons of different small business financing options.

A loan for existing small businesses: introducing WooCommerce + Stripe Capital

WooCommerce and Stripe
They want to know their money is funding a worthwhile business venture or expansion with strong potential and that meets their reasons for offering the grant. If you haven’t updated your business plan in a long time, you may want to do that first.

We’ll show you some resources for more grants in a bit.

Applying for small business grants 

Before applying for small business loans, you want to know:

  • Your credit score
  • Why you need the loan
  • Your average monthly revenue
  • The amount you’re seeking
  • Your plan for paying it back

Places to find small business grants and loans

In our example, Stripe Capital has established a payback rate of 12%. This means that every day, Stripe Capital will automatically deduct 12% of revenue from your WooCommerce account for that month until the loan is paid off. This is advantageous to you because it means your payment will rise and fall based on your revenue, so your payments will never exceed your income. If you make no revenue in a given month, there’s no payment.

chart showing a sales example

Essentially, there are three types of small business financing:

  • Debt financing means an institution gives you money and you have to pay it back, usually with interest on a set schedule. Sometimes they also want a form of collateral so if you default on the loan, they seize the asset you assigned to it. 
  • Equity financing is when another partner or business entity gives you a loan in exchange for partial ownership of the business. Usually you’ll pay them a percentage of your revenue going forward, and you lose some autonomy because you now have a business partner. But the loan is typically interest-free.
  • Revenue-based financing is when you get a loan, but you pay it back as a share of your revenue, not a fixed monthly payment. We’ll say more about this later when we talk about WooCommerce Payments + Stripe Capital and Wayflyer.

If you have an existing business, you’ll also want updated information on your annual revenue, number of employees, your Employer Identification Number (EIN), and other basic data. 

Once you receive an offer via email or in your dashboard messages, you can select the size that’s right for you and apply in minutes. For approved companies, funds typically arrive in as little as one business day.

Instead of interest, Wayflyer charges a fixed fee. And because it’s a revenue-based loan, you have little risk of going into default, because revenue-based loans adjust the payment each month based on how much income your business generates.

And there are other lists of grants from Nav, Bench, and the federal government. Government grants have a lower probability of qualification, because they tend to fund only very particular types of businesses.

What about the Small Business Association?

Note that with WooCommerce + Stripe Capital, all loans are issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC.  All loans subject to credit approval.

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For example, if you’re part of a minority group, you’ll be able to apply for a number of minority small business grants. You’ll have a better shot at those than the general grants, because there will be less competition, and because those grants were created specifically for businesses like yours.

And, there are services like Wayflyer, which conducts all its business online and specializes in eCommerce loans.

Unlike loans, which are fairly simple to understand, grants can be difficult to locate and navigate through all the requirements and restrictions.

If you’re looking for a way to give your new or existing business a financial boost, hopefully you’re now feeling a bit more inspired, motivated, and informed. 

Wayflyer offers no-interest, revenue-based loans specifically to eCommerce businesses for inventory and marketing expenses. 

So when you go to a site like Grantwatch, which charges a fee if you want all the details of a grant, you’ll see thousands of options, updated frequently. But before your mouth starts watering, remember that you won’t qualify for many of those grants, because they can be for very specific situations like those listed above.

For example, suppose you get a $20,000 loan from Stripe Capital, and they offer you a 10% fee. That means your total loan debt is $22,000 which is a loan amount of $20,000 and a loan fee of $2,000.

Before you apply for a small business grant, the first task is to narrow down your search around grants that your business actually qualifies for. There’s no use filling out a long application for a small business grant you have no chance of winning because you don’t meet the requirements.

The federal small business loan program includes several choices that won’t be useful to most businesses. But the 7a program is the most common one, and that one is worth looking into if you want small business financing.