While there are plenty of ways small businesses can get their hands on cash in order to grow, very few business owners actually understand what all of these choices really are — and how they work. In a lot of cases, small business owners end up simply taking the first valid option they find, regardless of terms or even the amount of money they’re receiving. And, for all of the other small business owners, the amount of choice when it comes to funding coupled with all of the misinformation floating around online means that they never take any action, leaving their business unable to scale, grow, or even thrive in times of uncertainty.

Today, one of the most popular ways small businesses are getting funding, especially eCommerce brands, is through Merchant Cash Advances. So popular because of the speed (you can sometimes get money deposited within 24 hours or less) and ease (applying online usually takes less than ten minutes), Merchant Cash Advances are changing the way online businesses grow — for better and for worse.

While sometimes these cash advances are the only way these online, micro businesses can get funding, it’s important to know what you’re getting into before you agree to the lengthy terms and conditions of taking this fast and easy money.

First, there are several different options for receiving Merchant Cash Advances, each one having its own advantages and disadvantages. (The main disadvantage being that they are extremely expensive — 30 to 70% interest rates being typical — compared with other forms of funding.) The three most popular for eCommerce brands are Square, PayPal, and Kabbage. Below is a closer look at each of these funding options. 



Created to help small businesses, both online and brick-and-mortar, Kabbage provides access to financing in a streamlined, simplified, and completely online way. Not only is it fast, but the application process is also free, which means there is really no risk to just seeing what you qualify for. (Of course, be warned, knowing the full funding amount you can get can be tempting to take right then and there.) For applicants, as soon as you receive approval, the funding gets deposited in your account. 

Because Kabbage looks at a variety of accounts where businesses can generate revenue online (think PayPal, eBay, and other eCommerce platforms), some business owners find that they’re more accurately represented, which means the funding that they can qualify for is more accurate. 

In terms of qualifying for a cash advance, Kabbage will want to see that:

  • Your business has been operating for a minimum of 12 months.
  • Your business has generated at least $50,000 of revenue over the last 12 months OR that your business has generated at least $4,200 each month for the last 3 months.


PayPal Working Capital

Like a lot of other Merchant Cash Advance options, PayPal determines how much funding your business can receive based on your sales history. Technically, PayPal Working Capital is not a Merchant Cash Advance, even though it looks incredibly similar to other small business programs. Over the past eighteen months, PayPal’s program has loaned over $500 million, making it one of the most popular funding programs available.

The main difference between PayPal Working Capital and other similar options is that PayPal offers a fixed amount business loan and a single fixed fee. Based on your percentage of daily sales, automatic repayments are withdrawn without interest charges or other fees (except, of course, the loan fee itself). 

Straightforward and fast, PayPal allows you to choose how much in loan funds you want to receive. Keep in mind, you can absolutely take less than the largest amount offered. PayPal also lets you select which percentage of all of your future PayPal daily sales you want to use toward repaying the loan. Therefore, if you’re not using PayPal to process sales, then you won’t qualify for its Working Capital program.

When considering PayPal’s Working Capital program, you’ll want to consider the following:

  • There’s no credit check for applying or qualifying.
  • The fixed fee is determined by three things: your final loan amount, your repayment percentage, and your sales history on PayPal.
  • Your loan is automatically repaid based on the percentage of sales you select, which means that the more sales you make, the faster you’ll be able to repay your loan.
  • If PayPal sales drop significantly or stop altogether, a minimum repayment still needs to be made, between 5% and 10% every 90 days. 
  • Loans can be paid in full anytime with zero fees.


Shift4Shop Online Small Business Funding

The Shift4Shop platform is designed to accommodate the needs of all their clients. A free, unlimited End-to-End eCommerce plan is available to those able to use the Shift4 Payments processor, while paid plans are still available as an alternative. Bigger companies receive more tools from higher payment plans, while Enterprise clients receive more attention. Yet even the smallest businesses — one-person entrepreneurial endeavors, mom-and-pop shops, dropshipping stores — can receive the essentials. They may also be eligible for a loan from Shift4Shop’s Online Small Business Funding program.

This resource offers financial assistance to those who need it, with almost no strings attached. We charge zero interest on the loans we give out. We do not impose conditions that similar programs from other platforms do, such as giving us company shares. Taking out a loan does not even affect your credit score, let alone your standing with us. All we ask is repayment over time, plain and simple.

To receive a loan under the Online Small Business Funding program, your business must meet a few qualifications:

  • It must be a Shift4Shop account.
  • The account itself must be “in good standing” with the company.
  • You must request a specific amount of funds.
  • In the application, you must state exactly what you intend to do with the loan.

Furthermore, the application will ask for your business’s legal name and DBA name, your own name, your phone number, and your email address.

Once you receive approval, you will be presented with multiple options for funding. The choices differ in several factors, with the payment amounts and terms being the key variables. To prevent anyone from getting overwhelmed, Shift4Shop connects each recipient with a dedicated staff member. They provide expertise and guidance in selecting the best plan for your business. They will also be available to support you as you work toward your goals. It is part of Shift4Shop’s dedication to helping online businesses thrive.


Square Capital

Similar in structure to PayPal Working Capital, Square Capital is a loan program for online merchants making sales through Square. In the last eighteen months, Square has loaned over $100 million to its sellers. Again, similar to a Merchant Cash Advance, Square Capital provides next-day funding that can be a lifeline for many businesses. However, because of the high rates and frequent payments, Square Capital, just like PayPal and Kabbage, can lead to financial difficulties down the road for some struggling businesses. 

However, the benefit of Square Capital is that there is no application process to qualify for a loan. Instead, if you qualify then you’ll be instantly notified, which means you’re guaranteed approval — no wait time required. If you accept your loan offer, payments on that loan will be made directly from your daily Square sales. Qualifying for a Square Capital loan depends on a few factors, including your “transaction history and activity level, as well as your business, customer mix, and growth” according to Square.

Wondering if you will qualify for Square Capital funding? Here’s what goes into qualifying:

  • Your personal credit score does not factor into your ability to qualify for a loan.
  • You’ll need to be processing at least $10,000 each month on Square.
  • Your business will need to be trending in the right direction, which means that it’s growing and looks like it will continue to grow. 
  • Square wants to see that you receive frequent payments — one or two large payments aren’t as likely to get you qualifying for a loan as several smaller payments each week. 
  • Square also wants to see that you have new and returning customers in order to ensure that you’re both attracting and keeping your customers.
  • If you qualify for a loan with Square, the amount will depend on how your sales are growing on the platform. The faster you’re growing on Square, the larger your loan will be in most cases. 

Not all Square loans come with the same terms, which means you could be looking at a loan APR of anywhere between 20% and 80%. Most Square users typically find, however, that they have an average APR of about 32%. This variability is due to the daily credit card receipts on Square — you’ll find somewhere around 10% of receipts will be used to repay your loan.

Here are some more things to consider when looking at Square Capital for funding your eCommerce business:

  • Square Capital provides up to $250,000 in loans.
  • Square Capital does not require a hard check on your personal credit.
  • Compared to other funding options, Square Capital is super fast.
  • The single fee of your loan is determined at the beginning, which means there are no changes or surprises down the road. 
  • Square Capital’s fee ranges from 10% to 16%.
  • If you repay your loan in a year, you’re looking at an APR of 20% to 80% in most cases. 


Payability is the leading funding solution for Amazon and eCommerce businesses. They provide capital advances of up to $250,000 and accelerated daily payouts based on your sales on Amazon or another eCommerce platform. Approval is based on your account health and sales performance so there are no credit checks, no complicated paperwork - just 24 hour approvals. With over $3 Billion of growth capital deployed, Payability is the largest and most established eCommerce funding solution. 

Here's more on their products: 

Instant Advance: A capital advance based on your future sales on Amazon or another eCommerce platform. Approval is based on account health and sales performance, so there are no credit checks, no origination fees, no minimum fees, and you can get approved in just 24 hours. 

Instant Access: Accelerated daily payouts for marketplace sellers paid on terms by marketplaces such as Amazon, Walmart, and more. Instead of getting paid every 14+ days, you can get paid for your sales the next day, every day. 

All of Payability's products are debt-free and equity-free. An Instant Advance is not debt, but a purchase of your future sales, while Instant Access makes it easier to self-fund by giving you your own revenue faster. High volume eCommerce businesses with $100k+/month in sales may qualify for their lowest rates. 


Other Funding Options for Small eCommerce Businesses

Although a fast and simple option, Merchant Cash Advances and Square and PayPal capital loans tend to be very expensive compared to other funding options. Before you agree to any of these “quick and easy” funding solutions, remember to take a close look at the effective interest rate. Because it’s so high, you’ll only want to use this type of money if you are confident you will get a strong return (one that’s higher than the interest rate you’ll be paying). 

In some cases, these types of loans are the only options small businesses have. But, that’s not always the case. A lot of times, small businesses simply aren’t aware of the other funding options available to them. 

Here are two other options you can consider:

  • Business credit cards. Although interest rates can be a concern, compared to other cash advances and working capital loans, credit cards are actually fairly cheap. Averaging around a 40% interest rate, getting a line of credit for your business can be a smarter option if you qualify. Of course, pay attention to any hidden fees that might haunt you later. 
  • Alternative lending platforms. In addition to the three major players listed above, there are some other solid options for receiving a business loan or merchant cash advance. Some of the more popular options include CAN, Amazon Lending, and Funding Circle. 
  • Crowdfunding. This option refers to the concept of raising the required capital in small amounts from a large number of micro-investors that share an interest in your company or project. Check this complete crowdfunding guide for additional information.


To Conclude

As eCommerce continues to evolve, so too do the ways that you can receive funding as a business owner. While the same small business loans that traditional businesses apply for are also available to you, there are some creative options being offered through eCommerce platforms.

Use an online business loan calculator from Logaster to estimate the rates based on your loan amount and understand the differences between traditional loans versus working capital funding.

Looking into all of the options, and really asking yourself why you need funding and how you’re going to use it, is essential to ensuring that you’re making a decision that will ultimately help (not hurt) your growing business.