Amazon recently launched a new financing solution for small business sellers in the form of a merchant cash advance.
The advance is provided by Parafin, a U.S.-based provider of growth capital for sellers, and lets sellers quickly access capital with transparent and capped rates, no fixed term, no personal guarantee, no credit checks or excessive paperwork, and no late fees.
It works by tying payment on the cash advance to a portion of the seller’s future sales for a fixed capital fee.
Amazon Launches Merchant Cash Advance Program for Small Business Sellers
Eligible businesses will be able to access capital ranging from $500 up to $10 million, enabling sellers to expand their businesses, protect margins, develop new products, grow inventory, and efficiently manage cashflow. The quick and easy access to capital is paired with a flexible payment schedule determined by a fixed percentage of the seller’s Gross Merchandise Sales (GMS) until the funding is paid off.
Expanding the Reach and Capabilities of Sellers
The director and general manager of Amazon WW B2B Payments and Lending, Tai Koottatep, said via a statement on the About Amazon press page: “Amazon is committed to providing convenient and flexible access to capital for our sellers, regardless of their size. Today’s launch is another milestone in strengthening Amazon’s commitment to sellers, and builds on the strong portfolio of financial solutions we already provide. This latest offering significantly expands sellers’ reach and capabilities, and broadens their access to capital in a flexible way – one that helps them control their cashflow, and by extension, their entire business.”
The co-founder of Parafin, Vineet Goel, explained why his company is providing the advances, saying: “We founded Parafin with the mission to grow small businesses, and we’re thrilled that we have the opportunity to do that by providing Amazon sellers with this merchant cash advance option. It’s a privilege to count ourselves among Amazon’s suite of financial solutions, and we look forward to making a difference for Amazon.com sellers looking to expand their business.”
A partner at SMB Group, Laurie McCabe, added: “It can be difficult for small- and medium-sized businesses to access capital, regardless of whether they’re just getting started or are more established. What Amazon is doing in partnership with Parafin to provide quick access to capital in a convenient and transparent way – and one that protects sellers during periods of low or no sales – is significant for the industry. It will be exciting to see how Amazon sellers use this merchant cash advance solution to help grow their businesses.”
How to Apply for Amazon Merchant Cash Advance
Applying for the merchant cash advance is pretty simple. First you must sign in to the Seller Central hub, then check to see which financing solutions your business is eligible for. If your business is eligible for the merchant cash advance, then you will see the option card on your Seller Central homepage. Select it and choose the financing option that works best for your business, including choosing the amount you wish to apply for. The final steps to complete the application will then appear on screen.
The program has already started rolling out to some U.S.-based businesses already, and it should be available to hundreds of thousands of eligible sellers by early 2023.
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If they offer competitive rates, this would be a really handy thing for many sellers.