If you’re a seller on Amazon, you have a few options available to get funded. Those include a working capital loan directly from Amazon, or an outside eCommerce funder. All of them provide fast and reasonably priced financing to help you grow. Funds can be used for inventory or ad campaigns to get new sales.
For the most part, Amazon seller funding is available to any seller on Amazon. When you have a hot campaign or need more inventory, it’s a great way to exploit opportunity. Especially during the holiday season.
Amazon Seller Funding Features
Financing products meant just for Amazon have a few factors in common. Most of the existing options for Amazon Seller Funding are completely digital. You simply open an account, connect your sellers portal, and you will receive an offer in hours.
The stipulations to get funded are minimal, and no long-term revenue history is required (although a few months is preferred). More details on qualification are below.
The last common them is that the application for any provider takes a matter of minutes, and usually fund in 1-2 days. Let’s dive in a little deeper on the existing options, so you can determine which is best for you.
#1. Amazon Lending
Loans from Amazon can come in sums of $1,000 to $750,000. The repayment process can take up to one year, but there are no early repayment fees.
Price of Amazon Lending
Annual interest rates for Amazon Lending range from 6% to 14%.
Repayment Terms
All of the Amazon Seller Funding options are short-term. The repayment term can be as short as 3 months but can go as long as a year for bigger loans. Fixed payments are collected from your Amazon account each month. You can also opt to have automatic payments made bi-monthly if it makes more sense for your business.
Lastly, Amazon Lending is an invitation-only lender. If you’re invited for a loan, the rates and fees you’ll have to pay will be transparently and clearly laid out.
Do you qualify for Amazon Lending?
If you’re a seller, Amazon already has most of the information they need to process your loan. So you won’t need to gather your tax returns and other relevant documents. However, Amazon Lending has a few stringent requirements you must meet to qualify for a loan. First of all, you need to be a registered seller. You will also need:
- A selling history of at least one year
- Good customer satisfaction
- At least $10,000 in sales revenue
#2. Debt-Free Seller Financing
When you sign up as a seller, the default pay terms are 15 days from the close of a period. That means on a rolling basis, you have money owed to your ecommerce shop at any given point time (provided of course, you’re still selling). That means you can “sell” or obtain funding against this balance you’re waiting to get paid. Generally it’s a debt-free solution, though there may be some loan aspects to it.
Debt-Free Financing vs. Amazon Lending
The biggest distinction here is that with debt-free seller financing, the funding company now owns the right to collect the payment (in 15 days, or so) from Amazon. It’s not a loan, they “buy” the revenue from you today.
Another distinction is the length of time in business. You don’t have to be in business for a full year like Amazon requires for its working capital loan program. As long as you have a few months of sustained sales, you likely qualify.
Do you Qualify for Debt-Free Seller Financing?
SellersFunding isn’t very difficult to qualify for. All you need is:
- 3-6 months of sales history on Amazon
- At least $5,000 in average monthly sales
- Positive customer reviews
- Consistent sales activity on a weekly/daily basis
Option 3 – Other Business Loans
Term Loans
Term loans are available for eCommerce, and you can get you up to $1,000,000 in funding. The loan’s repayment term will last from 6 to 12 months. APRs start higher than Amazon Lending at a minimum of 14.99%.
You must sign a personal guarantee for term loans regardless of where they come from. However, collateral (i.e. pledging your inventory) isn’t necessary.
Revenue Advances
Many lenders offers revenue advances of up to $1,000,000. These lenders don’t really offer anything unique to eCommerce, but they will fund them provided they have a sustained history. Repayment terms on their advances are shorter, lasting just 3 to 9 months.
Minimum requirements for a revenue advance include 6 months of sales history, with an average of $10,000 in sales per month. If that sounds like your eCommerce store, then you probably qualify.
There is a flat fee for the advance. For example, if you average $10,000 in sales, you will get appx. $9,000 to $10,000 upfront, in exchange for a fixed percentage of sales (i.e. 5%). So for every sale, you pay back 5% off the top to the revenue advance lender, up to a fixed amount (say, $12,000 average). It’s more expensive, because these lenders discount your future sales, but, it’s the least riskiest of all.
Things to Keep In Mind
Insufficient Funds
If your Amazon account doesn’t have sufficient funds, your account’s billing method will be charged for your loan repayment. If that payment method is insufficient, Amazon reserves the right to seize your inventory and sell it to recover your debts to them.
Violation or Offsets
When it comes to debt-free financing, as long as you have a balance waiting to get paid, you can get funded. The only risk not willing to be assumed is an unusually high amount of returns. This is built into the formulas before they approve you of funding, but could result in you having to pay back a balance because Amazon didn’t pay for some reason.
The Last Word On Amazon Seller Funding
Amazon seller funding can provide you with the financing you need to get started. You can start with an Amazon FBA Loan, or use a debt-free service like OAREX or Payability.
Most sellers use the funds for inventory or ad spend, but you’re not limited to that. You can use any type of financing for whatever you want, including working capital. You can cover short-term startup expenses with fast, simple, and short loans.
When starting out as an Amazon seller, there is no reason to not at least consider Amazon seller funding. It’s designed to allow you to get your inventory stocked and start making a profit.
