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Business loans for Amazon sellers
Restock inventory, market your brand and more with the right financing fit for your Amazon business.
Amazon Lending offers short-term loans and lines of credit to grow your business. While it can be a great option for some sellers, it’s only available by invitation – making it out of reach for some. But even if you’ve received an Amazon Lending invitation, it’s a good idea to consider all your financing options to find the right fit.
7 financing options for Amazon sellers
Traditional business loans don’t always meet the needs of Amazon sellers. These financing alternatives may be more friendly to e-commerce businesses.
- Amazon lending
- Inventory financing
- Business lines of credit
- Short-term business loan
- Merchant cash advance
- Peer-to-peer business loan
- Personal loan
1. Amazon Lending
Amazon Lending offers financing to sellers, however, there have been recent changes in how these loans are underwritten. On March 6, 2024, Amazon announced it stopped underwriting new business loans, though it will continue servicing existing ones. The decision is likely due to rising default rates and will force sellers to seek third-party financing, creating potential cash flow challenges. Amazon has yet to identify its trusted third-party, which may cause some uncertainty for sellers.
For borrowers, this shift does not have a significant impact on the terms or availability of financing, but it highlights a new direction in Amazon’s approach to managing lending risks.
Amazon’s financing programs include the following:
- Term loans. Amazon directly funds short-term business loans from $1,000 to $750,000 with terms up to 12 months. While it doesn’t advertise rates on its website, former borrowers cite rates of 6% to 16%.
- Lines of credit. Amazon partners with Marcus by Goldman Sachs to offer lines of credit with limits from $10,000 to $75,000 and APRs ranging from 6.99% to 20.99% APR.
- Interest only loans. Amazon’s interest only loans let sellers repay interest only for a set period. After the interest-only payment period expires, monthly principal and interest repayments are required.
- Amazon Community Lending. A program that offers low-cost term loans with nonprofit lender Lendistry. These run from $10,000 to $250,000 at an 8.00% to 9.90% APR with terms as long as five years.
- Merchant cash advance. Amazon gives sellers cash now to grow their business, and sellers repay the advance with their future sales. This program charges a fixed fee for the advance, not interest.
Application Process:
To apply for these programs, you must receive an invitation from Amazon. Typically, businesses that have used Amazon for at least one year and have consistent sales are eligible. Check your eligibility by logging on to Amazon Seller Central. If you qualify, you will see a message from Amazon Lending.
A major downside of Amazon Lending is that your funds are earmarked for Amazon alone. If you need capital to diversify your online store outside of the marketplace, you’ll have to look elsewhere.
Pros
- Competitive rates
- Diverse loan types
- Streamlined application process for eligible sellers
Cons
- Funds are earmarked for Amazon use only
- Invitation-only access
- Recent changes in underwriting
2. Inventory financing
Some lenders offer short-term loans backed by the inventory you’re purchasing. Typically you can borrow about 80% of the value of the inventory. Often, inventory financing providers can send the funds directly to your supplier — and in some cases, you can finance your inventory before it’s manufactured.
E-commerce inventory loan providers like Kickfurther are often more streamlined than other types of lenders that offer business loans. Rather than asking for paperwork, online inventory lenders connect with your Amazon seller account to underwrite the loan. Payments are paid back in monthly installments or as a percentage of sales. Often you’re charged a fixed fee instead of interest, with APRs that can exceed 100%
Pros
- Direct payment to suppliers
- Streamlined process, without extensive paperwork
- Flexible repayment options
Cons
- High APRs, sometimes exceeding 100%
- Fixed fees instead of interest
3. Business lines of credit
Business lines of credit are designed to cover recurring expenses like stocking up on inventory. Much like a credit card, these give you access to a revolving credit line for purchases or cash withdrawals whenever you need it. Many online business lenders, like BlueVine, offer lines of credit with fast applications with e-commerce sellers in mind.
Pros
- Flexible use of funds
- High credit limits
- Build business credit history
Cons
- Annual fees
- Interest on withdrawals
4. Short-term business loan
For one-time expenses, short-term business loans from providers like OnDeck could be a better option than a credit line. While term loans from banks are difficult for e-commerce sellers to qualify for, online lenders often have more flexible credit and revenue requirements. And they offer loan amounts that better meet the needs of Amazon sellers, usually from $5,000 to $500,000.
Most charge interest plus fees, which you pay back in fixed monthly repayments — usually over three to 28 months. The main drawback is that rates can get high, especially if you only have a small online store. Rates over 60% APR are common for this type of financing.
Pros
- Quick approval
- Large loan amounts
- Build business credit history
Cons
- High-interest rates, often exceeding 60% APR
- Frequent Repayments, which may be challenging for business with fluctuating cash flow
5. Merchant cash advance
With this option, you borrow a lump sum based on your credit card sales and repay it as a percentage of your daily or weekly sales, plus a fixed fee. Since it’s an advance on future sales, it’s not based on your credit score. A merchant cash advance from a lender like Fora Financial could help if you’re having cash flow issues.
Pros
- Quick funding
- Flexible repayment based on sales
Cons
- Extremely high APRs, sometimes over 300%
- Daily or weekly repayment requirement
6. Peer-to-peer business loan
A peer-to-peer (P2P) business loan is similar to a business term loan, except it’s funded by investors rather than a direct lender. Some small business owners prefer this option because it’s easier to qualify for than a bank loan. P2P platforms act as the middlemen between borrowers and investors: They oversee the application process, underwriting and repayment, but they don’t actually fund your loan.
You pay back these loans with interest and fees in monthly installments that can be expensive. Because P2P platforms don’t have the same return on investment as direct lenders, they typically charge higher origination fees. Funding Circle is one P2P lender that specializes in business loans.
Pros
- Easier qualification process compared to traditional bank loans
- Diverse investor pool, which can increase the likelihood of securing funding
- Streamlined application process
Cons
- Higher origination fees
- Expensive monthly installments
7. Personal loan
Personal loans are good for online merchants just starting on Amazon, as many lenders allow you to use a personal loan for business expenses. This type of financing relies on your personal income and assets rather than your business’s, with loans typically ranging from $2,000 to $50,000.
APRs on personal loans currently range from 6% to 36% APR — sometimes including an origination fee of 1% to 10%. Like business term loans, you’re charged principal and interest that you pay back in monthly installments over two to seven years.
Pros
- Accessible for new businesses
- Flexible use of funds
- Fixed monthly payments
Cons
- Higher Interest Rates for Lower Credit Scores
- Personal liability, like impact on personal credit
- Potential high origination fees
Compare a variety of business loans for Amazon sellers
These online providers may be a better option for Amazon sellers than a traditional bank loan. Compare personalized results by filling out the form with information about yourself and your Amazon store.
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How to decide which loan offer is best for my business
The best loan offer is the one with the lowest rates and fees with payments you can afford. If you qualify, Amazon Lending offers solid terms for its sellers. However, if you’re new to Amazon or have other e-commerce websites, you may want to consider these other options:
- Short-term loans. A short-term option like a merchant cash advance may work if you need fast turnaround and repayment terms based on your actual sales. Costs for short-term financing can run high, though.
- Long-term loans. Best if you’re looking to expand beyond Amazon or you need to refinance large debts. Term business, personal and peer-to-peer loans tend to offer the longest terms and highest loan amounts.
- Line of credit. This option can work well if you need more flexible financing. Borrow what you need when you need it, and use it for any purpose in your business — from financing more inventory or paying for a new marketing campaign.
How to increase your chance of approval
You might find it hard to get financing for your business through traditional lenders unless you have a proven track record of sales and revenue. The good news is that nontraditional lenders may offer loans to Amazon sellers, although you’ll have to meet certain criteria.
Look for loans designed for new startups and small businesses. Merchant loans, short-term loans and P2P loans generally have less stringent lending criteria than traditional loans. You can also investigate getting a business or personal loan from a lender specializing in bad credit – although they charge origination fees to offset risk.
The more you narrow your lender search to those likely to work with your type of business, the better your chances of approval. After gaining traction, develop a detailed business plan with a financial advisor to help you secure lower-cost financing.
Bottom line
If you’re eager for financing, signing the first loan you’re offered may be tempting. But building a business plan and comparing different lenders first is key to finding the best rates and terms you’re eligible for.
Learn more about business financing and compare the eight most popular types of business lenders with our guide to business loans.
Frequently asked questions
What are the eligibility criteria for Amazon Lending?
You must have used Amazon for at least one year with consistent sales to be eligible.
How has Amazon Lending changed its loan offerings?
Amazon stopped underwriting term loans directly but continues to service active loans and market third-party financing.
Can I use Amazon Lending funds outside of Amazon?
No, Amazon Lending funds are earmarked for use within the Amazon marketplace only.
What is inventory financing, and how does it work?
Inventory financing provides businesses with funds to purchase inventory, using the inventory itself as collateral, making it a quick but often more expensive alternative to traditional bank loans.
What is a merchant cash advance, and who should consider it?
A merchant cash advance is a lump sum loan repaid as a percentage of your sales, ideal for businesses with fluctuating revenue needing quick cash.
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