Etsy Business Loans
An Etsy business loan can provide quick funding to help sellers manage cash flow, purchase inventory, or grow their online store.
- Compare a wide range of lenders and rates
- Check your eligibility in minutes
- Find out how much you could borrow
It's fast, free and won't affect your credit score
There are close to one million active Etsy sellers in the UK, making £35,000 a year on average. So, whether you're brand new to Etsy or are hoping to expand your customer base, you can use Etsy funding to create exciting marketing campaigns or invest in product supplies to increase your revenue and grow your business.
Why get an Etsy business loan?
Running an Etsy store can be very profitable, but selling on the platform comes with fees and tough competition, which means you might need a financial boost to keep cash flowing, particularly in the early stages.
It costs sellers £0.15 to list an item, and 6.5% of the total sale price goes to Etsy, plus you pay a payment processing fee of 4% plus £0.20 per transaction. So even when you start making sales, your profit margins can be razor-thin.
Applying for an Etsy small business loan can help you establish yourself as a new business and get your store off the ground, cover essential selling fees and keep cash flow healthy .
Business loans for Etsy store
You’ve got a few options when it comes to financing your business:
Unsecured and secured business loans
Most business loans fall into the secured or unsecured loan categories. With secured loans, you offer up collateral to the lender, so if you fail to make timely repayments, the lender can seize your asset, sell it quickly and recoup their money. Secured loans offer higher risk for borrowers but much lower risk for lenders, so that means you can enjoy lower interest rates, higher loan amounts and longer repayment periods.
Unsecured loans are much quicker to apply for, with funds hitting your bank account in a matter of hours after the lender accepts your loan application. As unsecured loans pose a higher risk to lenders, you’ll find interest rates are higher, which can eat into your Etsy store profits.
Startup business loans
If your business has been trading for less than 36 months (three years), your small business might qualify for a startup loan. Loans start from just £500 and are designed to support brand new businesses to get their ideas off the ground. You can use this loan to improve your limited credit score or cover startup costs like initial raw material purchases.
Merchant cash advance
As your Etsy store accepts credit and debit card payments, you might be eligible for a merchant cash advance. This is a flexible type of financing where you repay a percentage of your future card sales automatically to the lender (usually 10%). This means repayments ebb and flow with your seasonality - in the months you don't make as much, you don't repay as much. This approach to funding particularly helps retail and e-commerce businesses.
What can you spend your Etsy funding on?
You can spend your business loan on anything you want (as long as it’s business-related!). Here are some spending ideas:
Marketing
Although you can optimise your Etsy store and products for free, making good use of keywords and tagging items clearly. Placing an Etsy ad can further boost your item listings, which can be a great way to reach new customers, build your audience and cut through the noisy marketplace. But investing in ads costs money, so instead of depleting your personal funds, you can make good use of your business loan and craft captivating marketing campaigns.
Branding and packaging
It’s only half the battle getting customers to convert — returning customers are the most valuable (they spend 67% more than new customers). You want customers to fall in love with your brand and your products. That’s why branding and packaging are so important — it’s a huge part of your customer’s journey. To make a lasting impression and build a brand that customers can identify with, you might have to spend a little money. Use your loan to take a branding course or pay a branding expert to help you.
Inventory
Your Etsy business would be nothing without its products, and that means sourcing the best raw materials and inventory for the best price. When you buy in bulk, you usually access better cost prices, so take advantage of these savings and stock up using your business loan.
Equipment
Let’s say you print greeting cards or you run an embroidery business, to create exceptionally high-quality products, you need some equipment, perhaps a top-of-the-range printer or an embroidery machine. Equipment can be expensive, but instead of buying the best tools out of your working capital outright, you can pay for it upfront and repay your business loan in manageable monthly instalments, keeping as much cash in the business as possible.
Service suppliers
Your Etsy store will live and die on its product photography and product descriptions. Without either, you won’t entice customers to even click through to look at your products. You can use your Etsy loan to hire product photographers or freelance copywriters to make sure your products have the best chance at competing with the rest!
Surviving seasonal lows
You don’t have to spend your business loan on any of the above; you can simply use it to weather the tough months. Etsy sellers usually enjoy seasonal peaks around gift seasons like Christmas or Easter, but the other months of the year can be a little short on sales (product-dependent). You can use your loan to pay bills, staff, business rent, etc.
How to apply for an Etsy business loan
Applying for funding for your Etsy business is easy. To get the most competitive rates, start by comparing eligible lenders for free using our self-serve loan comparison tool.
Instantly compare total repayable, interest rates and monthly repayments before deciding on your loan. If you do find a loan you like the look of, you can click through to complete your loan application.
We work with multiple alternative lenders, all based in the UK, who lend responsibly and ensure lending is accessible to small businesses who need it. Every loan application is looked at on a case-by-case basis, so you have a better chance of accessing funding with our lenders than with traditional high street lenders.
Find and compare loans for your Etsy business. Please note: getting a quote will not affect your credit score.
About the author
Adrian T
5/5
Amazingly fast, efficient service, minimal paperwork. So much faster than my business bank of twelve years.
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