Amazon Lending: How to Boost Your Small Business Dynamically

Amazon Lending logo

Beginning your journey with Amazon Lending can be a transformative step towards dynamically scaling your small business. With it, you can harness the power and flexibility that comes with partnering with one of the largest e-commerce platforms globally.

With “Sell here, borrow here” as your mantra, unlocking the potential of Amazon Lending becomes a breeze. Once you set up a seller’s account with Amazon, you open the gateway to possibly borrowing up to $750,000, providing a substantial financial cushion to innovate, expand, and excel in your entrepreneurial endeavors.

This initiative is designed to fuel your business growth, placing the tools for success right at your fingertips. Read on to find out how you can take full advantage of Amazon Lending’s robust features to elevate your business to new heights.

What is Amazon Lending?

Amazon launched Amazon Community Lending as a pilot program in 2011. From 2011 through 2019, borrowers got about $710 million in funding.

Amazon Lending provides short-term business loans for qualified sellers. The sellers use the funds to get additional inventory. Amazon Lending works in partnership with Goldman Sachs and other third-party lenders.

The available products include term loans, interest-only loans and lines of credit for US-based businesses.

How does Amazon Lending Work?

how Amazon Lending works - partner extending hand for handshake

You must have an Amazon seller’s account. The loans are by invitation only. There’s no credit check in the traditional style. Amazon automatically looks at select metrics, such as your sales volume and invites you to apply.

What’s the payment method? Your monthly payments are automatically deducted from your seller’s account based on a percentage of sales from your Seller’s Account. If there’s not enough money in your Seller’s Account to cover the loan payment on the due date, the funds are withdrawn from the credit card information you provided when you set up the loan.

There are various financial programs. You can follow the steps to choose which is best for you.

How Does Amazon Financing Help Propel Your Business Growth?

Amazon lending- pic of two people using advanced inventory management (1)

Amazon Financing can be a vital tool in scaling your small business proficiently. Here’s how it can significantly benefit your enterprise:

  • Enhanced Inventory Management:
    • Acquire a larger variety of inventory to meet customer demands.
    • Implement advanced inventory management systems for efficient operations.
  • Expanding Product Line:
    • Diversify and enlarge your product line to attract a wider audience.
    • Utilize insights and analytics to identify promising product additions.
  • Widened Customer Reach:
    • Increase your marketing efforts to reach more potential customers.
    • Leverage Amazon’s extensive network to tap into new market segments.
  • Strategic Company Positioning:
    • Strengthen your brand presence on the platform.
    • Develop unique selling propositions to distinguish your company from competitors.

In short, by taking advantage of Amazon Financing, you can infuse your business with the necessary resources to escalate growth, streamline operations, and establish a stronger foothold in your industry.

Here’s a word from FastTrackFBA about how they doubled their revenue with Amazon Lending:

Am I Eligible for an Amazon Loan?

amazon lending - sticky note with loan eligibility penned on it

Once you establish a Seller’s Account on Amazon Marketplace, Amazon will let you know. If you aren’t immediately eligible, you won’t receive an invitation to apply for an Amazon loan. If you get the nod, it is one of the better small business funding options in the market.

Amazon wants to enhance and grow businesses owned by historically disadvantaged sellers and those of low to moderate income. During the online application process, Amazon does not consider your credit score a factor when making a loan decision.

As you sell on Amazon, you may later become eligible due to sales volume. Eligible sellers may receive an invitation later.

How Much Could I Borrow from Amazon Lending?

Amazon lending - pick of money and blocks with word loan marked on it

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 loans.

Does Amazon Financing Have High Loan Payments

Amazon lending - does amazon financing have a high loan payments? pic of discussion with graphics of dollar signs on it.

The lending program has various loan rates. The loan rates are determined by the loan size, the term, and the quality of your credit, as determined by Amazon.

As with all small business loans, you’ll pay an additional fee for late payments. The annual interest rates range from 6.99% to 20.99%.

For Line of Credit loans, there is an additional maintenance fee if you don’t use 30% of your line of credit amount.

The Evolution of Amazon Lending

Amazon Lending has significantly evolved since its inception in 2011. Initially, it served as a straightforward lending service for Amazon sellers to boost their inventory. Over time, it has expanded to offer diverse financial products, catering to various business needs.

Amazon’s lending program reflects the company’s deepening involvement in financial services, targeting the unique needs of e-commerce businesses.

This evolution showcases Amazon’s commitment to providing comprehensive support to its seller community, not just in sales and logistics but also in financing growth and expansion.

The Global Impact of Amazon Lending

Amazon Lending has made a global impact, particularly among small and medium-sized businesses that operate on the Amazon platform. It has become a vital financial lifeline for these businesses, allowing them to scale operations, expand product lines, and enter new markets.

Amazon’s lending program is more than just a financial service; it’s a strategic tool that has helped numerous businesses around the world to leverage the vast marketplace that Amazon offers.

The success stories from various countries underscore the program’s effectiveness in fostering business growth on a global scale.

Sustainable Practices in Amazon Lending

Sustainability in Amazon Lending manifests in its approach to supporting small businesses, particularly those that might not have access to traditional banking services.

By providing these businesses with the necessary funds to grow, Amazon Lending helps in creating sustainable economic opportunities.

Furthermore, Amazon’s focus on data-driven lending decisions promotes financial responsibility and reduces the risk of over-indebtedness. This sustainable approach ensures that businesses are not just growing but doing so in a manner that is financially sound and viable in the long term.

Technology and Innovation in Amazon Lending

Amazon Lending is at the forefront of integrating technology and innovation into its financial services. By leveraging its vast data on sellers’ performance and market trends, Amazon can offer tailored financing options that suit individual business needs.

This data-driven approach allows for quicker loan approvals and more accurate risk assessment. Moreover, Amazon’s use of technology streamlines the entire lending process, making it more efficient and user-friendly.

The incorporation of advanced analytics and machine learning algorithms continues to refine the program, ensuring it remains adaptive and responsive to the evolving needs of Amazon sellers.

Amazon Lending Program vs. Traditional Small Business Loan

If you choose a bank loan, you’ll most likely make 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’re borrowing money to buy inventory, and using inventory sales through the online marketplace to pay the loan. That’s simple to track and analyze, compared to other business financing options, making it one of the biggest alternative lenders for small business. The only drawback being you have to be on Amazon platform.

With Amazon Lending early payments aren’t penalized. If you make the full loan payment early, erasing the loan early, there’s no prepayment penalty. That means with early payment, you’ll have interest savings.

As a credit option, the Amazon business lending program is fast, with the time from business completed applications to approved loans issued often within 2-5 business days. That’s a huge plus for business financing options.

Typically, a small business loan requires a 600 and better score and a requirement that you’ve been in operation for 12 months. Small businesses might get better interest rates on merchant cash advances, business credit cards or a business line of credit from other lending institutions, but small businesses typically wait 2 or 3 months for a decision. There may be various fees associated with your loan. And even with a short-term loan, you may pay a penalty if you pay your loan balance early, which is one of the main hidden fees in the fine print.

If you default on the loan by not making payments and your credit card is declined, Amazon may do a first-seller account disbursement. That means that Amazon can use and sell your remaining inventory to use against your remaining loan payout.

5 Steps to Apply

Eligible businesses can set up a seller’s account on Amazon Seller Central. Here’s a brief overview of the steps to take:

1. Sign in to Your Amazon Sellers Account on Seller Central

If you’re new to Amazon Sellers, don’t despair if you don’t receive an invitation for a loan. As your business grows, Amazon will automatically take another look. After opening and running your seller’s account for some time, you may become eligible for a loan.

2. Verify Eligibility

If you’re eligible for Amazon loans as an Amazon seller, your online business will get an invitation.

3. Choose a Financing Option

First, carefully determine the loan amount that aligns with your business objectives. Then, navigate through the user-friendly application process. Opt for a financing solution tailored to your enterprise’s unique needs, be it a term loan for long-term investments, an interest-only loan to preserve cash flow, or a flexible line of credit for ongoing expenses.

It’s important to identify the option that facilitates sustainable growth and fosters the financial health of your business.

4. Send Your Application

Submit your application for an Amazon loan.

5. Wait for Your Application to be Processed

You should get a response on your Amazon business loan application in 2-5 business days, with loans issued immediately.

Structured Overview for Setting up Your Seller’s Account

Business owners can refer to this concise table as a quick reference while working through the Amazon Financing application steps. It’s designed to streamline the process, helping small business owners navigate each phase with clarity and confidence.

Step ComponentDescription
Sign in to Your Amazon Sellers Account on Seller CentralBegin by logging into your Amazon Sellers account. If you're new, don't worry if you don't receive an immediate invitation for a loan; Amazon will reassess your eligibility as your business grows. It's recommended to actively manage your account as it can increase your chances of qualifying in the future.
Verify EligibilityOnce you are deemed eligible, your business will receive an invitation to apply for Amazon loans. This is an acknowledgment of your growing enterprise and a chance to further expand it.
Choose a Financing OptionDecide on the loan amount needed, considering your business goals. Navigate the application process and choose a financing option that aligns with your needs, such as a term loan, interest-only loan, or a line of credit. Selecting the right option can foster sustainable growth and financial stability.
Send Your ApplicationAfter selecting the most suitable financing option, proceed to fill out and submit your application form for an Amazon loan. This step is crucial as it initiates the official request for funds.
Wait for Your Application to be ProcessedOnce your application is submitted, expect a response within 2-5 business days. If approved, the loan will be issued promptly, enabling you to implement your business expansion strategies without delay.

Does Amazon financing affect credit?

No. If you’re seeking finances from potential lenders outside Amazon, they won’t be able to access information about your Amazon Lending activities. The loan issued and ongoing payments against the remaining balance are internal transactions within Amazon.

Does Amazon have 18 month financing?

No. The repayment terms are up to one year.

You can get 18 month financing on a short-term business loan through a traditional lender.

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Lisa Price Lisa Price is a staff writer for Small Business Trends and has been a member of the team for 4 years. She has a B.A. in English with a minor in journalism from Shippensburg State College (Pennsylvania). She is also a freelance writer and previously worked as a newspaper circulation district manager and radio station commercial writer. In 2019, Lisa received the (Pennsylvania) Keystone Award.