Managing Director of Boost Capital, Alex Littner, is using the ECommerce Expo on 28 and 29 September to highlight the availability of alternative finance for Online Retailers
THOUSANDS of ecommerce entrepreneurs are congregating in West London this week for the Ecommerce Expo ( ), two days of networking, education, and discussion about all aspects of doing business online. And one key topic will be the challenges of raising finance for these unconventional, ground-breaking, digital enterprises.
One of Google’s most senior executives, Matt Brittin, recently spoke ( ) about the need for those working in the technology sector in the UK to gain access to investment capital to build their businesses, and compete on the global stage. And it’s an area that we at Boost Capital have been giving an ever greater focus, as online business – retail (, in particular - increases in popularity and influence. Britain’s ecommerce market is the strongest in Europe, having grown by 15 per cent last year to be worth almost £76 billion in sales ( ). By 2018, about a fifth of all retail sales in the UK will be online.
However, while more people are rushing to shop via the internet, these companies still struggle with cashflow, frequently need money fast to buy in stock to honour unexpected orders, and can be at a disadvantage when seeking conventional funding due to their lack of physical premises or tangible assets to use as security. So-called e-tailers will also be occupied now with preparations for the expected Christmas shopping rush, planning and ordering inventory, putting the finishing touches to marketing strategies, and thinking about boosting staff numbers to deal with the extra seasonal business. All of these things require money to put into action, which is where the search for funding begins. And smaller online vendors all too often find traditional lenders are less than interested in their needs, with the banks unwilling to offer loans for relatively small sums.
Our business is working increasingly with eBay, Magento, and Amazon sellers, as more SMEs expand their reach through these popular trading platforms. Speed of service is at the heart of Boost Capital’s offering, and this is enabled hugely by the fact that virtual sellers operate in the way they do. Their use of online accounts makes information quick and easy to analyse, allowing us to make a rapid lending decision. We can fund most businesses two days after the initial application has been made, with companies able to get their hands on money on the same day approval is confirmed, but this process is made even easier with the help of ecommerce data. In many respects, our assessment procedures and online firms’ ways of working are a perfect match.
Online business owners might choose our short-term, unsecured loans to increase their working capital, to smooth out cashflow during periods of slow trade, or to take advantage of a good business opportunity, say, buying up discounted inventory, or fulfilling a major order. In any of these situations, we look at the overall health of the business and its ability to generate revenue to gauge its eligibility to borrow, rather than relying on a credit score, endless sets of company accounts, and a detailed business plan – the approach of many loan providers. When firms need money, they need it quickly, and with minimum hassle. They also want flexibility about how they repay what they owe, and we strive to offer that either through a fixed regular repayment, or a one-off lump sum. The most important thing is to deliver money swiftly, then make it possible for entrepreneurs to get back to their day job of running and growing their operation.
Fundamentally, the digital world moves very fast, and business owners in this space must also be quick and reactive to keep up with their competitors and customer demand. Traditional bank lending can often be difficult to secure, involve complex applications, and then be very slow to arrive – all of which can mean valuable opportunities have been lost. Even the online retailers opening up trading opportunities to SMEs don’t always help. Amazon, for example, has a lending programme for its sellers, but this is open to a select few by invitation only – in essence, Amazon must judge your business to be a good fit before it will offer any financial backing.
Innovative enterprises should recognise there are also increasingly innovative options available to them in terms of business funding. Just as the world of retail is evolving rapidly as more people shop online using smartphones and mobile devices, SME finance is benefitting from new digital developments, too. The new generation of alternative funders, including peer-to-peer finance, crowdfunding, invoice traders, and online lenders like us, are creating lending products that are flexible in their terms, fast in delivery, and adaptable to individual enterprise’s needs. Entrepreneurs are doing business differently, and should change their mindset about how they borrow, too. Just a little research could yield a wealth of exciting funding opportunities.

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