Financing a growing business is not an easy task, especially because as the business grows, the financial investment tends to increase. So, the first thing you should do, whether you are running an online or a physical store, is come up with a funding strategy.
With Amazon businesses, it is possible to run the business solely on personal capital for a good period of time. Nevertheless, as you expand your business, you’ll need to invest some more money and this may run into several thousand dollars.
So, if you’re looking to increase your inventory, expand your reach, and launch new products, then you may have considered taking a loan. That’s where the Amazon lending program comes in.
The Amazon Lending Program is one of the ways through which Amazon looks out for its sellers. The program aims to provide funding for sellers who are looking to expand their businesses. So if you have asked, “Does Amazon have a loan program?”, the answer is yes.
Of course, this may be a great funding option for you as your business grows. However, it’s important to understand how it works – eligibility, terms of application, and other criteria to determine whether it’s a good fit for you.
What is Amazon Lending?
Amazon Lending is a funding option that allows sellers to access short-term business loans from Amazon. The program is run by Amazon in partnership with Goldman Sachs and other well-known firms or lenders.
On the program, sellers can access term loans, interest-only loans, and other funding plans. However, only eligible sellers can access these loans. To determine eligibility, Amazon checks the sales potential and customer satisfaction metrics. Using the results from these checks, Amazon determines which sellers are eligible for 3,6,9, or 12-month loans.
Apart from the Amazon lending program, there are several other ways through which sellers can access business loans. However, with most of these funding options, there is a lot of paperwork and the wait time can be ridiculous.
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How Do You Qualify For Amazon Lending: Terms and Eligibility
As of now, Amazon Lending is an invitation-only service. The Amazon Lending option will appear on the homepage of your Seller Central account if you are eligible for a loan.
- Visible sales growth and performance. In order to estimate your repayment capacity, Amazon needs solid proof of your sales potential.
- Your seller account must be well-maintained and reflect a high level of customer satisfaction. Sellers whose metrics do not reflect excellent customer service are not likely to receive an invite.
Amazon does not consider your credit score when determining your eligibility status. If you do not meet the above requirements, you will not receive an invite.
Terms for an Amazon Lending loan
- Least Loan Amount: $1,000
- Maximum Loan Amount: $750,000
- Loan Duration: Fixed monthly payments of 3, 6, 9, or 12 months
- Interest Rates: Amazon does not disclose its interest rates
Different terms will apply to different sellers. Also, only eligible sellers will get detailed information about the loan terms.
Should You Consider Amazon Lending As A Funding Option?
Getting financial support for your business is not the easiest thing to do. In fact, there are very few funding options available to online business owners. So, the Amazon lending program is a good option for you. Amazon lending has proven to be a great option because of its flexible terms and ease of accessibility. However, there are several other reasons why you may want to consider it. Here are a few of them:
Easy Way To Keep Inventory Updated
Inventory management is one of the most common issues that sellers encounter. So, if you have struggled with keeping your inventory updated, Amazon lending can help. The loans you get from the program can go into purchasing enough inventory for your business so you can stay in stock.
Launching New Products
Expanding your product line can be a struggle if you’re short on cash flow. It is extremely easy to expand your offerings through Amazon Lending, particularly if there is a demand from your current audience.
The idea of taking a loan for your business may seem exciting, but it’s not always the best decision. For instance, new sellers may not have the capacity to repay these loans and this may put a strain on their finances in the long run. However, if you run an established business and your sales record looks great, you can go for it.
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How I Do Apply For An Amazon Loan?
Eligible sellers can apply for the Amazon lending program in five simple steps.
- Sign in to your seller account: New sellers may not get the option to apply initially, but this isn’t something to feel bad about. Amazon typically reviews sellers’ eligibility after some time. So, if your business records massive growth, you just may get another opportunity.
- Confirm Eligibility: If you’re eligible for the loan, you’ll get an invite to apply.
- Choose a suitable loan option: There are different loan options, so you should take some time to go through the options before choosing. Once you have chosen a loan plan, provide all the necessary details to complete your application.
- Submit your application
- Wait for your application to be reviewed: Unlike other funding options, the wait time for Amazon loans is quite short. The process typically takes about 5 days. Upon approval, your loan will be disbursed almost immediately.
Amazon Lending Program: FAQs
How long does the application process take?
The application process is not so long although you will have to wait for your application to be approved. However, approval typically takes about 5 days after which the funds will be made available.
What is the interest rate on an Amazon loan?
Amazon does not disclose its interest rates to the public. Only eligible sellers who have received a loan offer have access to this information. However, the interest rates may vary from seller to seller as it depends on the seller’s account and business information.
If I pre-qualify for a loan will my application be automatically approved?
Qualifying for a loan only makes you eligible to receive an invite. Amazon sends invites to pre-qualified sellers, but applications are not approved based on this.
Your application will undergo a more thorough review and this is where the verdict is passed. So Amazon may decide not to approve your loan request if your business does not meet the requirements.
How are repayments made?
The monthly payment is deducted from your seller’s account based on a percentage of your sales. If you don’t have enough money in your Seller’s Account to cover the loan payment on the due date, the loan payment will be withdrawn from your credit card using the details you provided at the point of application.
Amazon Lending Program vs Other Funding Options
A regular bank loan will require you to make payments from your bank account. Also, so many factors like insurance may eat into regular loans and make it difficult to repay them. Amazon Lending allows you to borrow money to buy inventory and use the stock sales to pay back the loan. As a result, Amazon loans are easy to track compared to other funding options. Usually, there’s only one drawback – you must be an Amazon seller to access them.
Furthermore, if you repay your Amazon loans on time, you get to save money on interest. Also, your credit score is of no importance when you’re trying to secure an Amazon loan. In contrast to this, typical bank loans will require you to have a good credit score.
So is the Amazon lending program a good funding option for your business in 2022? Yes, it is. If you qualify for the loan and have weighed your options, you can go for it.
With the Amazon lending program, scaling your business will certainly be easier. Launching new products with the funds you get from the program may be all you need to take your business to the next level. Using these funds judiciously alongside good software is a great strategy for success on Amazon.