What Is Amazon Lending? How To Get Funds From Amazon Lending Program
Every seller on Amazon.com dreams of establishing an enterprise that is seven figures in size. But achieving this goal isn’t possible without financing. And even when you’ve achieved the goal, you’ll require working capital to operate a daily operation to cover operating expenses, including inventory reorders and delivery costs, as well as marketing expenses, which is plenty when you want to stay at the forefront of competitors on the Amazon marketplace. To ensure that your store has constant production and demand business, You must always keep a reserve of funds to ensure that things are running smoothly.
Amazon seller lending program is the perfect way to increase the growth of the online presence of your business. In this article, we will look at the basics of Amazon lending and what Amazon seller financing options are.
Table of Contents
- 1 What Is Amazon Lending?
- 2 How Amazon Lending Works
- 3 3 main ways that an Amazon loan can help an Amazon business scale up:
- 4 How do you get funds from the Amazon Lending Program
- 5 How to Sign Up for Amazon Lending
- 6 Other Financing Options
What Is Amazon Lending?
Before we dive deep into the specifics of Amazon Lending, let’s provide an overview of the program. As we’ve mentioned, Amazon Lending was started in 2011 as a plan by Amazon to break into the small-business lending industry and provide business owners with an affordable and simple funding option to grow their online business.
How Amazon Lending Works
In contrast to a typical small business loan, sellers cannot solicit loans from Amazon. However, Amazon proactively pre-selects specific third-party sellers according to certain criteria, including sales volume, the history of their business, and other basic performance indicators to find businesses with a low risk of the loan. Then, Amazon prepares a loan proposal for a certain amount and informs the business directly. Although the amount stated in the loan offer is the highest amount that a company can get, they can choose to take out a loan smaller than the one they were authorized for.
The money lent from Amazon is available for one reason: buying inventory for sale on Amazon’s marketplace. The loan amounts vary from $1000 to $750K. They are short-term loans with terms for repayment of between 4 and 6 months. Amazon hasn’t provided any details regarding the APR they provide. However, various internet sources have reported deals ranging from 6-18%. This is comparable to or superior to the rates of interest provided by other lending institutions.
3 main ways that an Amazon loan can help an Amazon business scale up:
Management of inventory
Are you looking to benefit from bulk discounts? Do you want to work with an approved supplier or factory with greater minimum order quantities? With the additional capital, you can accomplish all of this and more.
Expanding your product or brand base
Are you thinking of a product you are certain would be the perfect addition to your current product line? You never know when you’re one step away from getting noticed by your customers.
Get more customers
Suppose you’re a business owner if buyers aren’t aware of your products, no matter how great they are. If you have an Amazon loan and a bit more money in your marketing budget, it’s possible to be certain that potential customers know what they’re lacking.
2. Easy Application Process
Anyone who owns a small business and has applied for business finance is aware that the procedure can be a hassle.
The first thing to remember is that you must meet various requirements for business loans. These include your personal and business credit reports and bank statements, as well as your balance sheets, as well as profit and loss statements, and tax returns, in addition to other prerequisites. As you’ll see, it takes the time and energy that no small-scale business owner has time to spare. And, if your loan application is denied, all that time and effort is wasted.
It’s a simple process. Amazon Lending application, on the contrary, isn’t as complex in that it’s not an application in the first place. Amazon reviews sellers they believe are good candidates for Amazon loans. If you’re one of them, they’ll email your an invite. The invitation to join the program will be displayed on your Seller Central homepage and email. After that, you can choose to accept, decline, or change the loan amount directly via the invitation’s website.
5. Fewer Fees
When you use Amazon Lending, you won’t need the expense of paying an origination charge. Additionally, you don’t have to be concerned about a penalty for early payment; that is a charge that lenders can collect when you pay off the loan in advance. While it may sound strange to be penalized by paying off your loan earlier, the money you pay back is padded with interest, and lenders make money through the amount you pay in the interest. Therefore they’re not looking to miss out on this opportunity in the event that you pay off your loan in advance.
When you use Amazon Lending, however, you don’t have to worry about that penalty for prepayment. If you repay your Amazon loan early, you’ll save money on your cost in the long run.
How do you get funds from the Amazon Lending Program
At present, Amazon Lending is by invitation only. If you’re eligible to receive the loan, the amazon Lending widget will be displayed on the home page of the seller central account, and through it, you may apply.
- You should have a demonstrated track history of growing sales. Amazon would like to be sure that you will be able to repay the loan.
- Your seller account has to be in good order and maintain excellent customer satisfaction. You’re likely to not receive an invitation if your account has low customer satisfaction or violations of policy.
Each seller will have its own conditions to offer its customers. Amazon isn’t able to provide any details on loan conditions until you are eligible.
How to Sign Up for Amazon Lending
Step 1. Sign in to Seller Central.
Step 2. If your company is eligible for the program, you’ll receive a notification from Amazon Lending on the homepage.
Step 3. Select the financing option that is most suitable for your business and up to the maximum amount you’re eligible for.
Other Financing Options
If you’re seeking other methods to increase cash flow and make investments in growth opportunities, think about these alternatives:
A loan program that is invitation-only for companies that utilize Square for payment processing and who meet the minimum lending requirements. Although the criteria themselves are not publically available, the program is based on the health of your account. If you’re eligible, Square will send you an email directly. It is a straightforward online application procedure that allows you to apply for funding within 24 hours. Then, when you make a sale, the repayments are automatically deducted as a set percentage of your sales.
Stripe Capital’s loan program operates exactly like Square’s, but it’s specifically for sellers who use Stripe to process their payments.
Fundbox provides financing options for you and your customers with a revolving line of credit and net terms. To be eligible, you’ll need at least $50,000 in annual revenues and three months of invoice past, a bank for a business account, and, since they draw credit, an average score of 500 for credit.
Based on your credit limit, you can use a credit card to fund specific investments. Be aware that interest charges increase quickly if you’re not able to pay the amount in a complete and timely manner.