Sell here, borrow here. Once you have a seller account on Amazon, you can borrow up to $ 750,000.
What is Amazon Lending?
Amazon launched Amazon Community Lending as a pilot program in 2011. From 2011 to 2019, borrowers received approximately $ 710 million in funding.
Amazon Lending offers short-term commercial loans to qualified sellers. The sellers use the funds to obtain additional inventory. Amazon Lending works in partnership with Goldman Sachs and other third party lenders.
Products available include term loans, interest-only loans, and US-based business lines of credit.
How does Amazon Lending work?
You must have an Amazon seller account. Loans are by invitation only. There is no credit check in the traditional style. Amazon automatically examines certain metrics such as your sales volume and invites you to apply.
What is the payment method? Your monthly payments are automatically deducted from your seller account based on a percentage of sales in your seller account. If there is not enough money in your seller account to cover the loan payment on the due date, the funds are taken from the credit card information you provided when setting up. of the loan.
There are different financial programs. You can follow the steps to choose the best one for you.
How Does Amazon Funding Help Grow Your Business?
You get more ability to grow your business when you buy inventory.
You can expand your product line through better inventory management.
You can reach more buyers.
You can better position your business.
Am I eligible for an Amazon loan?
Once you create a seller account on Amazon Marketplace, Amazon will let you know. If you are not immediately eligible, you will not receive an invitation to apply for an Amazon loan. It’s one of the best small business financing options out there if you get the go ahead.
Amazon wants to improve and grow businesses owned by historically disadvantaged sellers with low to moderate incomes. During the online application process, Amazon does not consider your credit score as a factor when making a loan decision.
When you sell on Amazon, you may become eligible later due to sales volume. Eligible sellers can receive an invitation later.
How much can I borrow from Amazon Lending?
There are minimum and maximum loan amounts for each type of loan. You can borrow from $ 1,000 to $ 750,000. The majority of high dollar loans are lines of credit.
Does Amazon Funding Have High Loan Payments
The loan program has various loan rates. Loan rates are determined by the loan amount, term, and your credit quality as determined by Amazon.
As with all small business loans, you will have to pay additional fees for late payments. Annual interest rates range from 6.99% to 20.99%.
For line of credit loans, additional maintenance fees apply if you do not use 30% of your line of credit amount.
Amazon loan program vs. traditional small business loan
If you go for a bank loan, you will likely be making payments from your business bank account. There are other factors that influence this bottom line, such as utility and insurance payments. With Amazon Lending, you borrow money to buy inventory and use inventory sales through the online marketplace to pay off the loan. It’s simple to track and analyze, compared to other business finance options, making it one of the top alternative lenders for small business. The only downside being that you have to be on the Amazon platform.
With Amazon Lending, prepayments are not penalized. If you make the full loan payment sooner, forgetting the loan earlier, there is no prepayment penalty. This means that with an early payment, you will realize interest savings.
As a credit option, Amazon’s business loan program is fast, with the time between the company’s completed application and approved loans issued often being 2-5 business days. This is a huge advantage for business financing options.
Typically, a small business loan requires a score of 600 and better, and a requirement that you have been in business for 12 months. Small businesses can get better interest rates on cash advances from merchants, business credit cards, or a business line of credit from other lending institutions, but small businesses typically wait 2 or 3 months to take a decision. Various fees may be associated with your loan. And even with a short term loan, you can pay a penalty if you pay off your loan balance early, which is one of the main fees hidden in the fine print.
If you default on the loan by not making payments and your credit card is declined, Amazon can make a first disbursement to the seller account. This means that Amazon can use and sell your remaining inventory for use against the repayment of your remaining loan.
5 steps to apply
Qualifying businesses must be set up with a seller account on Amazon Seller Central. Here is a brief overview of the steps to follow:
1. Log into your Amazon seller account on Seller Central
If you’re new to Amazon sellers, don’t despair if you don’t get an invitation for a loan. As your business grows, Amazon will automatically take another peek. After you have opened and managed your seller account for a while, you may become eligible for a loan.
2. Check eligibility
If you are eligible for Amazon loans as an Amazon seller, your online business will receive an invitation.
3. Choose a financing option
Choose your loan amount and follow the steps in the application process. Choose the option that best suits your business needs. You can choose a term loan, an interest-only loan, or a line of credit.
4. Submit your application
Submit your Amazon loan application.
5. Wait for your request to be processed
You should get a response on your Amazon business loan application within 2-5 business days, with loans issued immediately.
Does Amazon Financing Affect Credit?
No. If you are looking for financing from potential lenders outside of Amazon, they will not be able to access information about your Amazon lending activities. The loan issued and the outstanding payments on the remaining balance are internal transactions within Amazon.
Does Amazon have 18 month funding?
No. The repayment terms can be up to one year.
You can get 18 month financing on a short term business loan from a traditional lender.