Top 6 Lending Services for Amazon Sellers

Last Updated:

March 21, 2019

There’s no doubt that an Amazon business is a business like any other. One of the most important ways you can build your Amazon business is to expand it, such as by offering a greater inventory, but that takes money. In other words, you might want to consider an Amazon Lending Service.

Amazon Lending Services
Best 6 Amazon Lending Services

Deciding when you should go ahead and get funding for your business is a big step. If you act too soon, before you really have the potential to make money, you could be in debt and have trouble paying your loan back. 

Wait too long though, and you might lose out on getting a good deal. Getting the right loan at the right time is the key to growing your Amazon business.

Things aren’t that easy for Amazon sellers.

Traditional banks often don’t know how to handle online businesses and Amazon retailers. You’ll be hard pressed to find a bank offering an actual “Amazon loan” - banks usually only deal with brick and mortar stores that have some collateral to offer. 

It can be difficult to get offer collateral as an online business, making the whole business-lending thing even more complicated. Another issue is that traditional banks focus on providing big loans of over $100,000. That’s way more than you need. 

So, what can you do?

The good news is that there are lots of good options for Amazon sellers who need working capital to build their business. Here are six of the loan options available to Amazon sellers.

Read also: Understanding the balance sheet and profit and loss statement

  1. Amazon Lending
  2. Business Line of Credit
  3. Merchant Cash Flow Advance
  4. Business Loan Term
  5. Peer-to-Peer (P2P) Business Loan
  6. Personal Loans

1. Amazon Lending

If you have been with Amazon for some time now – at least a year – and have decent metrics, then you could receive an offer from Amazon Lending to get a direct short-term loan. These Amazon loans help sellers get new inventory and build their business.

Amazon Landing
Amazon Landing

Loan amounts offered range from between $1,000 and $750,000 with loan terms up to 12 months.

What you can get depends on your own seller account.

Amazon doesn’t advertise the terms that you might receive, but former borrowers have cited that the interest rate is between 6% and 16%.

There is one downside to direct Amazon funding though. That is that the money you get is only for things related to Amazon.

If you needed the money to diversify your online store and extend past Amazon, then you need a different kind of loan.

2. Business Line of Credit

A business line of credit offers flexibility with your spending. They work similar to credit cards, in that you have a credit line that you can use to make purchases or withdraw money as and when you need it.

Business Line of Credit
Business Line of Credit

Business lines of credit can be available for between $5,000 and $5 million. They are a great way to pay for marketing and hire some seasonal help to deal with busy periods.

Many providers of this type of credit will charge annual fees on top of their regular interest rates for the money withdrawn through the account.

3. Merchant Cash Advance

As the majority of money an Amazon business generates comes through credit card sales, business owners can use a merchant cash advance to get a little help when they have cash flow problems.

Merchant Cash Advance
Merchant Cash Advance

You essentially borrow a lump sum based on the credit card sales and pay it back – along with a fixed fee and a percentage of sales.

Typically, you can borrow anywhere between $2,500 and $250,000 and get the money in a matter of days.

This is great for when you need money in a hurry. One thing to keep in mind is that it might be difficult to meet the repayment schedule if you have a business that relies on a few large sales each month.

4. Business Term Loan

If you need a lot of money, then you should consider getting a business term loan.

These loans are offered by a number of banks and credit unions, but you could have an easier time getting approved if you go with an online direct lender. They tend to have less demanding eligibility criteria.

Business Term Loan
Business Term Loan

The amount you can get with a business term loan depends on your credit history and annual revenue and can be between $5,000 and $5 million.

Most lenders charge interest and fees, with monthly installments across 5 to 20 years.

Given the huge variety of business loans on offer, you should start out by pinpointing how you will spend your loan. Also put together a business plan if you haven’t already, to give you – and the lender – a better understanding of the costs and goals of expansion.

5. Peer-to-Peer (P2P) Business Loan

A peer-to-peer business loan is somewhat similar to a business term loan, except that the money comes from investors instead of a direct lender.

P2P Business Loan
P2P Business Loan

P2P loan providers are the middlemen that connect borrowers to investors. They will oversee the application process, underwriting, and payment, but they aren’t the ones who actually fund the loan.

Be aware that these repayments may be expensive. P2P lenders are known to charge higher fees than direct lenders because they don’t get the same return on investment.

6. Personal Loans

Personal loans are a good choice for online merchants that are just starting out with a selling platform such as Amazon.

Many lenders will allow you to use the money from a personal loan for business purposes. 

Personal Loans
Personal Loans

Personal loans are generally between $2,000 and $50,000, which is good if you want to buy some new inventory or hire a marketing professional. The kind of financing depends on your own personal credit rating and finance and not your business’s. 

Personal loans come with APRs between 5% and 36% and, much like a business loan, you can expect to pay interest and fees that is paid back over the course of the loan term – between two and seven years.

The Bottom Line

  • An Amazon business is a business like any other. 
  • It takes careful thought, planning, and financing to succeed. 
  • Consider the above six Amazon lending services choices when the time comes for you to borrow money to build your business.