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Aug 3, 2022
10 min read

Founder's guide: credit for ecommerce stores

As an ecommerce founder, one of the most valuable things you can do is extend your brand’s cash flow. In today’s environment of uncertainty and high interest rates, cash flow and profitability have become the focus for most brands. But even in a boom market, positive cash flow is key to maintain control and flexibility.

How you access and leverage credit is a crucial piece in proper cash flow management – making your understanding of the lending landscape and choice in providers critical. 

The right lending partner and product can launch your business into its next stage of growth and profitability. The wrong lender can put your brand on a treadmill of endless borrowing and expensive debt.

In short: Too many brands underestimate the impact their credit partner has on their profitability. Maintain control of your business and its finances by making sure your credit works for your needs. 

Read this before you sign up for a “fixed fee” cash advance

We launched Highbeam Capital because we were fed up with the “fast” and “simple” offers of “fixed fee” credit providers that were destroying our customer’s profits. 

One of the most marketed but notoriously destructive lending tools is the “fixed fee” loan, aka merchant cash advance (MCA). 

MCAs are tempting for short-term needs — but harmful in the long run

At Highbeam, we emphasize three factors for evaluating your brand’s financing options: flexibility, fairness, and cost. 

Here’s how MCAs typically measure up:

  1. Inflexible — You pay a fixed fee when you receive the loan, regardless of how much of the loan you ultimately utilize. To make matters worse, the rapid repayment schedule (via daily sales clawbacks) is fixed, starts immediately, and has no early repayment benefit.
  2. Unfair — MCA fee structures make it extremely hard to compare or understand their all-in costs. MCA lenders will adjust a loan’s size, fee, payback schedule, etc to ensure they are always getting the most out of you.
  3. Expensive — MCAs are one of the most expensive loans available. Providers use “fees” rather than interest rates (APRs) as a way to hide their all-in cost. When you calculate an MCA’s fee into an APR, however, the rate frequently exceeds 30% (more than your credit card!).

We built the Highbeam Credit Comparison Tool to help you understand the real cost of a loan. This tool allows you to compare all your options in an apples to apples view, to ensure you go with the best source of capital available.

When it comes to MCAs, as the age old saying goes, if the deal seems too good to be true, it probably is.

Highbeam - Credit Comparison

Benefits of a banking line of credit

Highbeam is an ecommerce banking partner built with your long term interests in mind. We’ve structured our line of credit to ensure your brand grows sustainably, profitably, and for the long term.

So, how do we do this? 

  1. Flexibility — Access and repay capital on your schedule.
  2. Transparency — Transparent, fixed, and fair interest rates presented in an easily understood APR.
  3. Fairness — We are committed to building a lasting partnership which means protecting your interests. 

We unpack the pros and cons of different credit options in our 2023 report: How to leverage credit to optimize your brand's growth.

Why timing is crucial when navigating credit options

By working with the right credit partners, you establish a safety net for your business. 

Stop scrambling for one-off loans as payments come due. Establish a banking line of credit before you need it and preserve your brand’s runway (and your sanity). 

Open a Highbeam account to receive a credit offer and get smarter about your access to working capital in less than five minutes.

Banking that helps brands
make smarter decisions

Automate your cash flow with real-time insights, refreshingly transparent credit, and high yield deposit accounts.