Is Amazon Lending Right for Your Amazon Business?
What is Amazon Lending?
Ready to scale up your Amazon business? Amazon Lending is a program that provides financing options for small and medium sized businesses to grow on Amazon. If your business is eligible to apply, you will be notified of pre-qualification in your Seller Central account, and you’ll then complete the digital application. Once approved, you will select the option that is best for your business, up to the full amount you are eligible for. The loan is typically issued within five business days and Amazon Lending makes it easy to understand your fees up front.
How can Amazon Lending help grow your business?
The goal of these loans is to provide additional financial assistance in areas where you might be lacking. These funds can provide the capital you need for more employees, invest in bulk inventory, expand your product line, boost your advertising initiatives to reach more shoppers, and more.
How do you know if you are ready to apply for Amazon Lending?
Just because you have qualified for Amazon Lending doesn’t necessarily mean your business is in the right stage for this type of growth. Only a seller really knows the realities of the state of their business, so start by evaluating what type of seller you are.
- If you are an established seller but don’t have a clear marketing strategy, ROI, or your income is unpredictable and sporadic…
- : You might want to rethink applying for Amazon Lending. Having a good idea of your marketing strategies and an income that is predictable and consistent should be your goal before moving forward with a loan.
- If you are a new seller who is having a hard time fulfilling orders, keeping products on the shelves, and running your Amazon business has taken over the majority of your daily workload. In short, your new business venture is booming!
- : You are off to a great start, hiring additional help will not only maintain growth within your business but you will remain profitable with consistent growth.
- If you are a veteran seller who has a good idea of where their business is and where it is going. You are a seller with multiple years of selling experience and have most likely already had financial help of some sort.
- : As mentioned, you have probably already had experience with financial assistance and are prepared to take on growth with ease.
After consideration, are the rewards greater than the costs?
When we look at Amazon Lending as a loan service, we notice from the get-go that their application process is easy in comparison to other business loans. As opposed to providing banks statements and credit reports, Amazon looks at your selling history and the state of your business.
Now let’s talk about interest rates. The interest rate for each user will differ, but the typical rate for an Amazon Lending loan is around 16%. The repayment term of this loan is 12 months however, making payments ahead of time will ensure you keep some of this money in your business. Not paying on time will result in loss of inventory because it is used as collateral.
Lastly, Amazon Lending has provided over $3 billion in loans since it’s start in 2011. The loan cap is $750,000 with the smallest loan being at $1000. This program was truly built to help small and medium sized businesses reach optimal growth. Whether you are receiving a small or large loan, it is important to consider the stage of your business and how you will be able to sustain growth while paying off a large sum.
Deciding on a loan for your business is more than just reading one article. There are a lot of things to keep in mind when deciding whether or not your business is ready for financial assistance. If you keep pushing profitable inventory, Amazon will take notice and you will be able to take advantage of Amazon Lending.
Until then, view your true profit and ROI, monitor your sales and orders, and keep track of advertising spend with Seller Spike. This all-in-one tool will give you the insights you need to grow your Amazon business and ensure you are ready to take on a loan from Amazon Lending.