E-Commerce Loans: How to Fund Your Online Business?

Aug 09, 2020

Due to increased digital penetration in India, the e-commerce market has received a much-needed boost. An article from India Brand Equity Foundation suggests that the e-commerce industry as a whole will be worth around Rs. 13.97 Lakh Crore by 2027. As such, it is the ideal time to start your dream e-commerce business.

Nonetheless, one needs to have access to substantial funds to get an ecommerce business started. While the investment varies, depending on the scope and size of your venture, listed below are a few areas where e-commerce businesses need to spend during their initial stages.

Budgeting the E-Commerce Funding Requirement

  • Creating an e-commerce website

Developing a website requires technical expertise, which you can source via hiring an external agency for your e-commerce site development. While there are various professional website developers in the market, small and big, hiring such help would require substantial investments, the funding for which can be fulfilled via online ecommerce loans.

  • Website hosting expenses

Developing a website is only an initial step to establishing an ecommerce business. Selecting a reputed hosting company and ensuring website security establishes a firm foundation for customer trust. Such essential services may strain your pockets when starting out, thus requiring you to consider associated expenses when deciding on total funding requirements.

  • Effective marketing

After getting an ecommerce business up and running, focus on marketing is another essential to create a wider reach. To do so effectively, you can outsource the job to professional marketers. Handing over the marketing requirement will, nevertheless, lead to incurring further expenses for your business.

In case of a funding hurdle in the implementation of your business plans, you can always resort to online ecommerce loans. Check out the various funding options available to potential fund an e-commerce business.

  • Availing a business loan
  • Finding an angel investor
  • Using your credit card to finance some of the smaller expenses
  • Seek monetary assistance from venture capitalist

While the options listed above can be beneficial, finding a venture capitalist or angel investor ready to help your ecommerce business can be challenging. Additionally, unsecured financing like business loans attract high interest rates that increase the total cost of a loan. Plus, a higher risk to the lender also makes for stringent eligibility requirements.

Rupeek Fintech Private Limited offers a competitive financing alternative to budding entrepreneurs in the form of hassle-free gold loans.

How Can Gold Loans Fund Your E-Commerce Venture?

Seed funding or initial investment is an initial concern for most new businesses. One can thus consider resorting to gold loans, a quick financing option available against the pledge of gold items. Instead of keeping your ornaments idle, gold loans allow you to utilise the asset’s equity to raise finance.

The funds you receive by pledging gold is free from end-use restrictions, meaning you can utilise it for diverse funding needs when starting your e-commerce business. Therefore, aspirants looking to launch an ecommerce business can utilise this fund to meet their venture’s funding needs,from setting up a supply chain system to ensuring proper logistical support, among others.

Reasons to Opt for Gold Loans

Reputed lenders today provide gold loans for e-commerce platforms as substantial funding to jump start the business. Listed below are some reasons why this option can be a better alternative to ordinary business loans or other funding sources.

  • Secured loans 

Gold loans are secured forms of credit since a borrower pledges his/her gold jewellery to avail funding. It thus allows an individual to utilise the equity in an owned asset to fund the establishment of an e-commerce business.

On the other hand, a lender’s risk is reduced as the pledged gold serves as a surety of loan recovery. This transcends into eased policies (low interest rates, flexible repayment options) from the lender, it also allows a borrower to remain relatively stress-free with such credits. Unsecured business loans do not come with this facility.

  • Increased repayment flexibility

Gold loans offer more flexibility in terms of repayment. For instance, lenders can choose to repay the principal and interest outstanding through a single payment at the end of the advance’s tenure. Rupeek offers this repayment option as a bullet payment facility.

The lender providing these online ecommerce loans thus simplifies repayment for borrowers. Starting an ecommerce business, you can thus avail a gold loan and delay repayment until its maturity. During this period, the business can generate sufficient profit that makes it easy to repay the outstanding dues without considerable financial strain.

Rupeek eases repayment further by its simple interest calculations on the loan amount. Thus, interest payments remain constant throughout the loan term.

  • Shorter tenures

The maximum tenure for gold loans can go up to five years with various lenders. Nevertheless, in most cases, borrowers can opt for a significantly shorter repayment term, starting from just a few months. Therefore, rather than bearing a load of repayment around for years, e-commerce business operators can clear all debt within a shorter duration.

Some financial institutions provide gold loans for e-commerce platforms with terms starting at just 6 months. Thus, gold loans are the ideal opportunity for financing if you intend to avail credit for a short term.

  • High loan to value

Rupeek Fintech Private Limited offers a high LTV or loan to value ratio, allowing borrowers to avail funds at a high percentage as against the value of gold. It takes into account the rate of gold on the day of loan approval before determining a borrower’s eligibility to avail advance. It thus maximises financial aid from such a loan. Thus, it can be the ideal online ecommerce loan for starting your venture.

Today, it has become much easier to monitor your outstanding gold loans as well. With mobile applications and 24×7 customer support, online ecommerce loans such as these are quickly becoming irreplaceable to prospective entrepreneurs.

Gold jewellery mostly remains as an idle asset without much utility except at social events and gatherings. Indian consumers often miss out on monetising their assets effectively. Gold loans with attractive features thus come as a smart financing option for potential e-commerce business operators who can pledge their gold ornaments to avail funds. Such funds can save them from the hassles of long processing time and bring quick advance at their disposal.

Rupeek Fintech Private Limited further makes it easier to avail emergency funds affordably via the Rupeek Quick facility. It is an overdraft facility on gold loans that helps meet last-minute financing requirements with the least hassle, and you pay interest only on the utilised amount instead of the total principal. The overdraft gives you an extended credit line to avail anytime, anywhere, even on bank holidays and Sundays, at the touch of a button on the Rupeek app.

Gold loans thus help you fulfil diverse financing needs to set up or run your e-commerce business with ease and provide a scope for urgent as well as frequent borrowing. Make sure to estimate your gold’s value and apply for the loan amount as per your lender’s LTV for improved chances of approval of the total amount sought.