Demystifying Debt: Busting Four Common Myths for eCommerce Entrepreneurs

In the world of eCommerce, financial decisions can make or break your business. Among these decisions, the choice between debt and equity financing remains a daunting dilemma. With Amazon gaining more momentum every year, it’s important for FBA Sellers and other businesses in the ecommerce space to fully understand all of the resources available to them. 

It's time to dispel the myths and shed light on the true nature of debt to help you make informed decisions that can fuel your growth. Let’s dive into the top four Myths that our partners at OnRamp Funds have found when it comes to debt.

Myth 1: Debt is the Beginning of the End

The very mention of the word "debt" can send shivers down the spine of many business owners. However, it's crucial to understand that debt, when managed wisely, can be a powerful tool for growth. Those who understand how to leverage debt effectively see it not as a threat, but as an opportunity to seize growth that otherwise wouldn't be possible due to lack of funds. Avoiding debt could actually be the "beginning of the end" if it means missing out on these opportunities.

Myth 2: Debt is Too Expensive

It’s a common misconception that all debt is bad debt. Yes, the risk of encountering hidden fees or high interest rates exists, but not all financing options are created equal. The revenue-based financing model is designed to be fast, easy, and flexible, ensuring that you can avoid the pitfalls of bad debt. 

With transparent fees and repayment plans that sync with your sales, the aim is for you to thrive, because their success is directly linked to yours. Think of it this way: if a loan can turn one dollar into fifty, isn't that an investment worth considering?

Myth 3: Equity is the Smarter Choice

Many entrepreneurs believe that avoiding debt by opting for equity financing is a safer route. While it's true that this option doesn’t involve borrowing money, it comes with its own set of drawbacks—primarily, losing a share of your company. 

If you're planning to sell your business in the future, imagine celebrating a lucrative sale only to remember that a significant portion of that profit will go to investors. With a revenue-based financing company, you retain full ownership and enjoy all the profits of your hard work.

Myth 4: It's Too Hard to Get the Right Amount

When seeking financial assistance, many business owners find themselves stuck with limited options. Whether it's a single loan offer from a bank or an "exclusive" financing deal, these options often do not cater to the unique needs of your business. 

With many revenue-based lenders, things are done differently. You may even see multiple cash offers, each with their own repayment terms and fee rates, giving you the freedom to choose the best fit for your business's goals and circumstances.

Conclusion

It's time to change the narrative around debt in the eCommerce sector. By understanding the true nature of debt and the flexibility it offers, you can make decisions that propel your business forward rather than holding it back. Don’t let myths deter you from exploring all financial avenues—after all, the right financing could be just what you need to fuel your next big growth phase.

If you want to talk further about this topic and learn how your business can benefit from funding,  reach out to our friends at Onramp Funds.