Undeniably, Amazon provides a great platform for merchants to connect with customers and quickly fulfill orders.
This is apparent from the staggering number of people - over 310 million worldwide - who make purchases on Amazon yearly and the platform's impressive roster of over 2.5 million active third-party sellers.
But if your Amazon business is thriving, there's a chance you've received a loan offer from the platform.
If you're considering expanding your business and need more funds, you may wonder if getting Amazon seller financing is a good choice.
So, read along and discover what Amazon lending is, eligibility criteria, pros and cons, and possible alternatives.
Amazon Lending is an exclusive program provided by Amazon to aid the growth of small and medium-sized businesses operating on the Amazon platform.
This invitation-only program offers a range of short-term financing options tailored to meet the specific requirements of qualified sellers, allowing them to expand their operations effectively.
Here's how it typically works:
To qualify for Amazon Seller Financing, you need to have an active seller account on Amazon's platform and meet specific criteria set by Amazon.
These criteria may include your sales history, account health, and overall performance.
You will get a loan offer through the Amazon Seller Central dashboard if you fit the requirements.
If you find the financing offer acceptable (with details such as the loan amount, repayment terms, and interest rates), you can accept the terms.
Amazon will then disburse the funds directly into your seller account, and you can use the funds for eligible expenses related to your business on Amazon.
You'll be required to repay the loan according to the agreed-upon terms.
Repayment is typically made automatically through your seller account, with funds deducted from your future sales on Amazon.
The exact repayment structure and schedule will be outlined in the loan agreement.
Remember, the specific details and availability of Amazon Seller Financing may vary over time, so it's always a good idea to check Amazon's official seller resources and communicate directly with Amazon Seller Support for the most up-to-date information and guidance.
Now, let's review various loan options for Amazon sellers based in the USA and UK.
Amazon term loans are financing options with fixed monthly payments and a short-term repayment period.
The interest rates for these loans are determined based on your business account and sales metrics.
This means you must have a proven record of successful sales for a substantial time before being considered for this loan.
Since Amazon already possesses your business information and sales history, there is no need for extensive paperwork.
You can conveniently apply for the loan directly through Seller Central, streamlining the application procedure.
Individual interest rates for businesses on Amazon are not publicly disclosed, as they are determined by unique business circumstances and negotiated agreements.
However, Amazon provides a range for the annual percentage rate (APR), which can fall between 3% and 17%.
The loans have a minimum amount of $1,000 and can reach a maximum of $1 million, with term lengths that range from 3 to 12 months.
To qualify for an Amazon Term Loan, you must meet the following requirements:
There is also an additional option for USA-based Amazon sellers – Lendistry (Amazon Community Lending).
It is a dedicated program designed to provide financial support to small businesses in socially and economically distressed communities, whether in urban or rural areas.
This program allows eligible Amazon sellers to secure loans ranging from $10,000 to $250,000.
The loan terms can extend to 5 years, allowing for a more flexible repayment schedule.
✅ Eligibility does not require credit checks, making it accessible to a broader range of sellers
✅ The loan approval can be obtained in approximately 5 days
✅ The loan amount is directly transferred to your seller account
✅ There are no hidden fees, ensuring transparency in the borrowing process.
✅ Amazon Lending term loans are ideal for sellers with a steady stream of customers
❌ Loan payments are automatically deducted from your seller account, even during months with lower sales volumes
❌ You can use the loan funds only for Amazon-related financing purposes, not other expenses or investments
❌ Short-term loan durations typically result in higher monthly payments
❌ Meeting the eligibility criteria does not guarantee loan approval
❌ If your business experiences a decline in performance, it may become challenging to meet the loan repayment obligations
❌ Access to Amazon Lending term loans is limited to sellers who receive an invitation
An Amazon Lending interest-only loan functions similarly to an Amazon term loan but with a crucial distinction.
It is a non-revolving funding option allowing sellers to repay only the interest amount for a fixed period.
This financing option allows sellers to repay on interest amount for a fixed period before repayment on the principal amount (amount of the loan itself).
Once the interest-only period concludes, the repayment structure transitions to equal monthly payments covering principal and interest (amortized repayment).
This feature provides additional flexibility and more time to repay the loan, which can be advantageous if you await inventory restocking.
The eligibility criteria, loan amount, terms, advantages, and disadvantages are mostly identical to those of the Amazon Term Loan.
However, Amazon's Interest-Only Lending provides the added benefit of lower monthly payments during the initial period.
Once again, it is essential to note that you cannot apply for this loan type unless you receive an invitation from Amazon.
📌 This funding option is available for USA-based sellers.
Amazon has partnered with Goldman Sachs to offer qualified sellers a Business Line of Credit explicitly designed for Amazon sellers.
This line of credit differs from an Amazon Lending loan, allowing sellers to request funds as needed rather than receiving a single lump sum.
With the Amazon Business Line of Credit, sellers can access a credit limit of up to $1 million.
Interest rates for this credit line range from 6.99% to 20.99% APR, allowing sellers to choose a suitable financing option that aligns with their financial goals.
Limited information regarding the Amazon Business Line of Credit program from both Amazon and Marcus by Goldman Sachs is available.
However, upon receiving an invitation, you will be directed to Marcus' website to verify your eligibility and finalize the application process.
It's important to note that Amazon will share your merchant data with Goldman Sachs as part of the application process.
This data, including your business revenue information, will be utilized by Goldman Sachs to evaluate and underwrite the line of credit accordingly.
📌 This funding option is available for USA-based sellers.
Advantages of an Amazon Business Line of Credit
✅ Offers greater flexibility compared to an Amazon Lending loan
✅ You can use funds as you wish – operational costs, inventory purchases, product development, manufacturing, and marketing expansion.
✅ Lines of credit available up to $1 million
✅ A fully digital application process that you can complete within minutes
✅ Fixed interest rates
❌ The credit rates may be relatively high
❌ You must pay maintenance fees if at least 30% of the credit line remains unused.
❌ Late payment fees apply.
❌ The program is invitation-only
❌ Amazon does not have control over the underwriting process
Amazon's merchant cash advance program provides flexibility regarding loan repayment.
Instead of fixed monthly payments, you repay the loan by allocating a portion of your future sales and a fixed capital fee (the cost of the funds you receive).
This payment structure is particularly suitable for businesses with fluctuating or seasonal sales patterns and those that struggle to meet high monthly payment obligations during slower sales periods, as payments are directly tied to revenue.
The terms for an Amazon merchant cash advance consist of a fixed capital fee, eliminating the concern of fluctuating interest rates over time.
One benefit is knowing precisely how much will be taken from your sales.
The minimum loan amount is $500, while the maximum is $10 million. Additionally, there are no requirements for minimum payments.
Amazon has collaborated with Parafin (USA) and YouLend (UK) to introduce this new financing option as part of their ecommerce funding choices.
It is accessible invitation-only to sellers who have been actively selling on Amazon for at least 3 months, making it more accessible than some of Amazon's other lending programs.
✅ A flexible payment schedule that safeguards your business during slow seasons
✅ No requirements for minimum monthly payments
✅ Fixed capital fee and no interest charges
✅ Quick application and approval process
✅ You can use funds for various business purposes
❌ Availability is limited to invitation-only
❌ Requirement of at least 3 months of selling on Amazon
❌ Potentially higher costs compared to other funding options
Qualifying for the Amazon seller financing program is impossible for new sellers on the platform.
1. Start by selling a single high-quality product with high demand requiring minimal investment.
3. Request customer reviews to improve your conversion rate.
4. Consider optimizing SEO and organic marketing strategies.
Remember that increasing sales and reinvesting in your business takes time but is crucial.
After putting in the necessary effort, you will be pleasantly surprised by the outcomes.
As an Amazon seller, you are likely familiar with the difficulties of ensuring a consistent cash flow.
For example, you must cover the various expenses in managing your supply chain before generating revenue from sales.
If you don't fit the Amazon lending criteria or are looking for more affordable loan terms, numerous alternative funding solutions are available.
One such option is Myos – the first asset-based financial provider.
We understand the fast-paced nature of the ecommerce industry, and our funding decisions are made swiftly, enabling you to take prompt action and take Amazon sales by storm!
By choosing Myos, you can benefit from the following advantages:
Are you ready to boost your sales and expand your customer base?
Take advantage of our non-binding offer today and unlock your business's growth opportunities!