The Ultimate Guide to Amazon Seller Loans

Amazon is an e-commerce giant and one of the main players in online markets. Active online shoppers must have come across this platform loads of times, as it seems to be an immense warehouse that contains every single thing you need. Amazon started with books and developed into a prosperous online platform that connects sellers and buyers, and facilitates transactions and delivery logistics. 

Amazon is a respectable and reliable platform, well-known by customers, and needs no advertisement, unlike new and small businesses. Marketplace strategy offers a bunch of benefits for newcomers:

1. Better business visibility – the marketplace platforms are already popular and trusted sources of goods. Once you become a part of them, you are shared the portion of the trust. At the initial stage of development, you don’t need to spend money on marketing and design to become visible in the e-commerce world, as the platform has already made it. 
2. No need for infrastructure – setting up a company requires a great deal of planning, as not only the idea matters but the whole infrastructure, its smooth and efficient functioning. By becoming the marketplace option, you can increase revenue by saving money on shipping, distribution, and marketing. However, it will only be possible if you meet the requirements of the platform, and pay monthly fees and commissions. 
3. Less banking routine – the customers pay directly to the marketplace, and it makes the payment to the e-commerce. Therefore, no extra spending on banking. 
4. Better focus on the target group – if you have a specific product you can join the specialized platform only for your buyer.

After joining the marketplace, the business will get a chance to grow. Surely, there’s competition and rivalry among the sellers, yet it’s a good chance to improve and prove self-worth. 

However, after the initial period of growth, the development reaches a certain point and can turn into stagnation if you don’t invest more in inventory and product enhancement. Leveling up needs more financing, which becomes a serious obstacle on the way to expansion. Banks are not willing to support small businesses, especially if there is no collateral. Besides, the conditions are too restrictive with excessive payout rates. 

Luckily, there are plenty of other alternatives, which can help the business make ends meet and make a profit. 

When deciding on the types and providers of Amazon loans, it’s important to consider all the ins and outs. Make sure the financial source is a reliable partner and you also meet all the requirements. 

1. Amazon Lending 

Amazon offers short-term loans to qualified sellers (which is defined by the volume of sales) to help them finance inventory and expand market influence. The amount offered starts from $1,000 and may go up to $750,000 depending on the requirements and collateral. The rates of payout can vary depending on your account and sales metrics – 3% APR all the way up to 17%.

However, this offer is available only for the chosen ones, as Amazon decides which business can get such funding. 

2. Amazon Line of Credit

The line of credit offers you flexibility, as you can make financial help requests when there’s a need for that. This option is definitely time-saving, as it can be done in a few minutes. Typically the lenders charge monthly fees ranging anywhere from 1.5% – 10% and there’s no fluctuation in interest rates. 

However, the interest rates can get too high, and late payments can all lead to extra fees. It’s important to consider all the additional payments you can possibly have and make sure that in the worst-case scenario you will be able to make the payment. 

3. Merchant Cash Advances 

Merchant cash advances are based on the future payback idea. It is a quick and simple process and you can receive a lump sum of money within a few days. The amount can go up to over $200,000. The payback time is usually up to 18 months. Once you receive the loan, you will pay it back daily, weekly or monthly, depending on the conditions you agreed on. 

The lender charges a percentage of sales and fees. However, to be eligible for such funding, you need to operate on card transactions.  

4. SBA Microloan

Small Business Administration (SBA) offers microloans from $500 to $50,000. Interest rates vary from 8% – 13% APR. Business owners who apply for a microloan need to be aware that SBA  requires some type of collateral and the personal guarantee of the business owner. 

5. Peer-to-Peer Loans 

Peer-to-peer lending is getting more and more followers nowadays. The lenders can offer you financial help if your business profile seems appealing to them. The business owner must create a profile on a P2P website, post the amount you wish to borrow on this website, and specify the interest to pay. Potential investors consider the claim and make their bid.

Every business needs support for its growth. While traditional bank loans are rarely available for starters, there are alternatives that can help you build your business, not for all the money in the world.