When starting your own business, you likely need a platform and a loan to jumpstart your path. Plenty of companies offer loan services, but selling on Amazon provides you a place to sell and a chance to earn loans on the same platform.
It’s crucial to do your research on something as life-changing as taking out a loan, so let’s find out if Amazon Lending is right for you and your company.
What Is Amazon Lending?
Amazon Lending is a simple program that offers loans to small or medium businesses selling through Amazon. This means you must be an Amazon vendor to qualify for Amazon Lending.
The question that remains is how to get an Amazon loan.
How Does Amazon Lending Work?
Amazon’s loan program is invite-only, so once your business is live and actively running on Amazon, you will find out if you’re eligible for Amazon Lending.
If you are, your next step is choosing the type of loan you want or need. You may be able to receive a higher amount than you had in mind, which may be even more helpful in the long run. Keep an open mind.
After you decide on the amount of your financial option, you can fulfill all the steps to receive your loan.
Why Consider Amazon Lending for Your Small Business?
Amazon is not only the largest retail company in the world, but there is an abundance of resources available to its sellers and the small businesses working with them. They’re respected all over the world and transparent with their offered programs.
Loans for Amazon sellers help its sellers learn, grow, and profit through small business lending. Consider them for the potential they offer your business by being associated with Amazon.
Amazon Lending Terms
The Amazon Lending terms vary on what financial option you choose from the program, but whatever you choose, the Amazon Lending interest rate is undisclosed until you accept a loan.
A term loan is a fixed amount of money that Amazon will give you with an exact date on which you must pay back the money. This also requires a monthly principal and interest repayment that depends on the amount of your term loan
This loan is received by simply filling out an application on your Seller’s Central Portal.
Interest Only Loan
This type of loan is a more commonly known one. Amazon offers a fixed amount of money you can hold onto for a bit before gradually paying it back. This is different from a term loan because it isn’t just one singular payment.
Once this period is up, however, the monthly principal and interest repayment is required. This loan is also as simple as filling out an application on your Seller’s Central Portal.
Business Line of Credit
Amazon Lending’s business line of credit is essentially that. You receive an assigned fund to your credit and use it as needed for your business.
This option is one of the better ones solely because you don’t need to estimate how much money you may need to get your business started or to reach a groove.
The amount you need at a certain point can change a week or month later. You can ask for more as you go and less as you go. This assigned credit doesn’t come directly from Amazon, however.
The business line of credit is a collaboration between Amazon and Marcus by Goldman Sachs. They work together to provide businesses with the money they need to start on Amazon.
What Are the Amazon Lending Requirements?
The most crucial requirement for Amazon’s loans and line of credit is eligibility, but what determines whether or not your business is eligible?
You can’t automatically apply for monetary help when you create your business. You must prove to Amazon that they can trust you with their money. The best way to do this is by having consistent sales with happy customers.
One of the most essential determining factors in whether you will be eligible for a loan or not is how your company is succeeding. If you have a steady flow of sales or your business shows signs of potential, you’ll have a higher chance of approval.
Not only should you bring in consistent sales, but your customers should also be happy with your products. You need to be providing quality as a seller. Bringing in more customers with good reviews allows Amazon to put their faith in you.
Amazon Lending Pros and Cons
There are several reasons why Amazon Lending is a great option for new businesses, but there are also negative aspects. It ultimately comes down to what you want for your company and how you want to get there.
Your business and loans are both provided by the same company.
You have options to choose from.
Amazon is a well-known, respected, and trustworthy company.
As long as you aren’t eligible, you’ll never receive financial aid from Amazon.
Amazon does not disclose interest rates.
You have to start your business on Amazon if you want to receive loans from Amazon Lending.
Alternative Funding for Amazon Sellers
There are plenty of other funding options for your Amazon business if Amazon Lending doesn’t seem like a good fit for you. From asset-based lending to Microloans, if you don’t want to take a loan out with Amazon, then you don’t have to.
Determining whether or not Amazon Lending is right for you comes down to what you want out of your business. If your goal is to start on Amazon and become a trustworthy seller on their site, then Amazon Lending is a great option to get you there. It’s up to you and what you want the future of your business to look like.
If you don’t think being an Amazon vendor is for you, then neither is Amazon Lending. It helps to know your prime lending rate to determine if Amazon Lending is right for you
An Outsourced CEO and expert witness, Jim Thomas is the founder and president of Fitness Management USA Inc., a management consulting, turnaround, financing and brokerage firm specializing in the gym and sports industry. With more than 25 years of experience owning, operating and managing clubs of all sizes, Thomas lectures and delivers seminars, webinars and workshops across the globe on the practical skills required to successfully overcome obscurity, improve sales, build teamwork and market fitness programs and products. Visit his Web site at: www.fmconsulting.net or www.youtube.com/gymconsultant.