Your Best Amazon Lending Options
You need money to make money, so let’s take a look at the Amazon lending options that can help you grow your business. You can use money from Amazon lending options to, for example, take advantage of bulk discounts with higher minimum order quantities, expand your product base, and buy more advertising to reach more customers.
So what are your Amazon lending options?
- Not a bank
- Not a credit card
- Fintech (digital banks)
Not a Bank
Banks are generally not a good choice for Amazon lending options. That’s because most banking institutions don’t understand third-party selling on Amazon. It’s not their typical type of small business loan. Most Amazon sellers typically get started with relatively little capital. But one of the first things banks look at is your cash reserves; if you don’t have much cash on hand, banks aren’t likely to want to give you more.
Even if the bank does approve your loan, it’s likely your interest rate and repayment term are less than desirable because the bank views Amazon sellers as riskier than a “normal” business.
So we recommend looking at other Amazon lending options
Not a Credit Card
Sure there are entrepreneurs who recount how they maxed out their credit cards to keep their businesses afloat and today are lecturing at MBA programs and living the high life. What you don’t hear as much about are the business owners who maxed out their credit cards and failed because they couldn’t get out of debt, not to mention the interest on that debt. Credit cards charge high-interest rates and at some point, there are just so many credit lines you can open. This is why credit cards are not among the recommended Amazon lending options.
It’s perhaps not surprising that Amazon itself provides Amazon lending options, but there is one big caveat. Amazon explicitly states that its lending program is by invitation only. What that means is when you sign into Seller Central you’ll see a message that your business is eligible to apply. Amazon has pre-vetted your business, which makes the application process that much faster, but if you don’t see an invitation when you sign into Seller Central, you can cross this off from the list of Amazon lending options.
If you are invited, complete an online application and choose a term loan with an interest-only period from Amazon Lending or a line of credit from Marcus by Goldman Sachs; you can also apply for both at the same time. An additional option is an Amazon Community Lending Term Loan (which cannot be combined with the term loan or line of credit), a non-revolving lump sum with a specified payback period offered in conjunction with Lendistry, an established minority-led Community Development Financial Institution (CDFI) serving urban and rural small businesses in socially and economically distressed communities.
The approval process is fairly quick and doesn’t require any extensive paperwork. Which is great if you’re invited. If you are not invited, there are other Amazon lending options to consider.
Fintech (Digital Banks)
Fintech is short for Financial Technology. Broadly speaking, Fintech simplifies financial transactions by using technologies such as blockchains and artificial intelligence to streamline and secure financial transactions. Venmo is an example of Fintech.
Digital banks (meaning banks that only exist online) are a type of fintech and potential Amazon lending options. As unconventional businesses themselves, digital banks are likely more receptive to the funding needs of Amazon sellers. And because digital banks reduce operational costs through more efficient use of technology, these savings are passed on to customers with more favorable lending terms.
An example of a fintech digital bank is Alta, a suite of financial services specifically designed for eCommerce-based businesses. This includes up to $1 million in lending capital with rapid-approval credit lines based on market performance.
AccrueMe doesn’t issue loans. Rather, AccrueMe temporarily invests in your Amazon selling business, up to 50 percent of the total capital invested in the business. AccrueMe earns a temporary profit share calculated as half of the temporary investment.
It doesn’t cost you anything out of pocket and there are no fees. If you don’t make a profit, you don’t pay AccrueMe that month. Moreover, you can pay back at the end of any month any portion of AccrueMe’s investment to reduce the percentage of AccrueMe’s investment, thus reducing the AccrueMe percentage of profit share. Another option is instead of paying AccrueMe its share of profit for the month, you keep it and invest it.
While not a loan, you still have to qualify for AccrueMe funding. Basically, you have to be a successful Amazon seller that can show profitability over six months with potential for growth. While AccrueMe distinguishes itself as an investor and not a lender, we’ve included it among Amazon lending options because is a way to obtain the cash flow needed to grow your business.
GETIDA to Improve Cash Flow
There may be money your business can use you don’t realize you have. And that you could easily lose. You may still need to consider Amazon lending options to grow your business, but GETIDA can help Amazon FBA sellers recover funds for added cash flow.
Amazon handles inventory management and order fulfillment for FBA sellers. When mistakes happen, as they are bound to do, you are owed FBA reimbursement, which can add up to between 1% to 3% of your annual revenues. Unfortunately, in most cases, it is your responsibility to identify errors and submit claims for reimbursement.
Most Amazon FBA sellers don’t have the time or resources to do this. GETIDA makes obtaining your FBA reimbursement simple, easy and cost-effective. GETIDA software reviews the previous 18 months of transactions to flag instances that qualify for FBA reimbursement. With your approval, the appropriate claims are filed for reimbursement.
This is all done for free. The only charge is a percentage of approved claims. And the first $400 in FBA reimbursement is free.