Disclaimer: This guest post from Payability is meant to inform eCommerce businesses about different financing options. It is not intended to be financial advice. We always suggest that businesses do additional research before deciding on a financing option as there are countless other options available.
When you sell on Amazon, you have the ability to reach millions and millions of consumers. The exposure means you can make A LOT of money, but because of Amazon’s payment delay, you don’t actually get that money for at least two weeks.
It’s no surprise then that Amazon sellers often seek outside financing to help cover these cash flow gaps and make investments in inventory, marketing, and other growth areas.
As you may know from personal experience, getting financing from a bank is not ideal as an Amazon seller. After all, your financing needs are likely immediate — for example, if a supplier offers a flash sale on inventory, you’re going to need funds right away so you can take advantage. With banks, the application process alone can take several weeks. Not to mention, approval rates for small and online businesses are low.
Fortunately, there are other financing options to consider as an Amazon seller. Here, we break down Amazon Lending, Payability, and other alternatives so you can find a solution that will get you the cash you need, when you need it.
Amazon Lending: What It Is & How It Works
Since 2011, Amazon has been providing financing for their top-tier sellers. With Amazon Lending, sellers can get a short-term loan up to $750,000 with loan terms up to 12 months.
Initially, Amazon loans were restricted, meaning sellers could only use the funds to invest in inventory to sell on Amazon. Now, it looks like sellers can also invest in new products or promotions. While it’s not specified, these additional use-cases are likely restricted to new products to sell on Amazon and advertising campaigns on Amazon, such as Amazon Sponsored Products.
The program remains invitation-only, so if you’re eligible to apply, you’ll get an offer from Amazon via email and/or in Seller Central. But getting an invitation isn’t a loan guarantee — you still have to go through their application process and, in some cases, provide additional documentation to prove your financial and customer service strengths.
Here’s more about how Amazon Lending works:
- Funding Amount: Between $1,000 to $750,000.
- Application Process/Approval Time: There is a simple online application process. You may need to submit information such as proof of sales, A-z Guarantee claims, and more. Typically, you’ll get a decision within five business days, unless additional processing time is needed for your application.
- Eligibility: While Amazon’s minimum criteria is not online, eligibility generally includes the following: Amazon businesses who maintain excellent customer metrics, show a steady increase of sales, and have sold at least $10,000 in the past 12 months. If you meet these requirements and Amazon sees that you’re eligible, you’ll get an invitation to apply via email and/or Seller Central.
- Interest: Varies by account. According to seller feedback in various online forums, APRs range from 3% to 16.9%.
- Terms: Amazon’s short-term loans have monthly auto-payments and repayment terms up to 12 months. Your actual payments are deducted from each Amazon payout that follows your loan payment due date. If there are insufficient funds in your disbursement, your outstanding loan balance will be deducted from the next one.
- Origination Fees: No
- Prepayment Penalty: No
- Early Repayment Benefits: Sellers pay interest for as long as the Amazon loan remains outstanding. If you pay back early, your interest due will be prorated on the remaining balance.
- Credit Check: No
- Accelerated Daily Payout Option: No
- Multichannel Funding Options: No
- Customer Support Team: No, the entire process from offer to payback is fully automated.
Amazon recently partnered with Marcus by Goldman Sachs to offer the Marcus Business Line of Credit to U.S.-based Amazon sellers. According to an announcement from Amazon, “The Marcus Business Line of Credit offers competitive, fixed interest rates and provides Amazon sellers with the flexibility to request funds as needed, subject to approval.” Similar to Amazon loans, the Marcus Business Line of Credit is invite-only. If you’re eligible, you’ll see an offer in Seller Central.
At the end of the day, Amazon Lending and the Marcus Business Line of Credit can be convenient options for top-tier sellers who only sell on Amazon. Be on the lookout for an offer in Seller Central — and keep in mind that offers are valid for 30 days.
Instant Advance by Payability: What It Is & How It Works
Payability, a financing company for marketplace sellers, offers a variety of funding options for Amazon sellers as well as sellers who do business on other or multiple eCommerce channels. With Instant Advance, you could get up to $250,000 in as fast as 24 hours — all without a single credit check or compounding interest payment.
Payability is not a loan company, but a short duration purchase of future receivables. They base all their funding decisions on account health and sales performance — not on credit. And, they allow sellers to connect their entire eCommerce portfolio, so you can show the full picture of your sales history across every marketplace and platform you might use.
Here’s more about how Instant Advance by Payability works:
- Funding Amount: Up to $250,000 (actual amount is typically 75% – 150% of one month’s worth of total sales revenue).
- Application Process/Approval Time: The application process is simple and only takes around 10 minutes to complete. Just fill out some basic information, and connect your Amazon store and any other channels you sell on. You could get a decision and funding in as fast as 24 hours.
- Eligibility: Instant Advance minimum requirements include 9 months of selling history and an average of $10,000/month in sales.
- Interest: As we mentioned, Payability is not a loan company, so there is no interest. Instead, Payability charges a fixed flat fee, which starts at 0.50% per week.
- Terms: As you sell, you’ll remit a fixed percentage of your sales to Payability until the total amount owed is paid back.
- Origination Fees: No
- Prepayment Penalty: No
- Early Repayment Benefits: Sellers receive a fee rebate for every week the advance is paid back early.
- Credit Check: No
- Accelerated Daily Payout Option: Yes, see Instant Access by Payability. To qualify, you must have at least 3 months of Amazon selling history and average monthly sales of $2,000.
- Multichannel Funding Options: Yes, in addition to Amazon.com, Payability also funds businesses that sell on Walmart, Shopify, Tophatter, Newegg, eBay, and more. Decisions are based on account health and sales performance.
- Customer Support Team: Payability customers get to talk to real people the whole way through. Not only will you get to discuss your offer with a sales representative, Payability also has a 100% U.S.-based customer service team that you can speak to throughout the entire funding process. They are available from 9 a.m. to 6 p.m. EST. Payability customers often mention how much they appreciate speaking to real people and getting real customer support throughout their entire funding journey.
Payability’s other financing solution — Instant Access gives sellers next-day access to their payouts. With Instant Access, you could get paid the next day, every day on your marketplace sales on marketplaces that pay on terms (i.e. Amazon every 14+ days). You can learn more about how Amazon payout and unavailable balances actually work here.
Using Payability & Amazon Lending Together
Amazon determines how much they’ll lend to you and there is little room for negotiation. So, if you’re approved for a loan, but it’s not enough for the particular investment you have in mind, you can supplement the amount with Payability’s Instant Advance and/or opt for Instant Access to boost your cash flow with daily, real-time payouts. You could also use Payability’s products together, separately, or alongside Amazon Lending. It really depends on your particular needs.
There are a variety of other financing options that you can consider as well. Here are a few:
- Square Capital & Stripe Capital: Similar to Amazon Lending, Square Capital and Stripe Capital work on an invite-only basis for businesses that use their respective platforms. They evaluate your account health to determine eligibility and then offer simple online application processes with funding in as fast as 24 hours. Repayments are made automatically and deducted as a percentage of your daily sales.
- Fundbox: Fundbox offers a revolving line of credit and net terms for your customers. To qualify, you need at least $50,000 in annual revenue, three months of invoicing history and a business bank account. Fundbox does pull your credit and you need a FICO score of at least 500.
- Credit Cards: If you’re in a pinch, credit cards could help you cover a specific investment, but keep in mind that if you’re not able to pay your balance in time, you could be responsible for hefty, compounding interest payments.
Which solution is right for your business?
At the end of the day, sellers like you have access to a variety of financing solutions, so you can boost cash flow and invest in other growth opportunities. To figure out which solution is right for you, consider these variables:
- Number of channels you sell on
- Amount of money you need
- When you need funds
- The state of your cash flow
From there, you’ll be able to determine which financing partner will most effectively take your business to the next level. In the meantime, visit Payability.com to see how thousands of eCommerce businesses use Instant Advance and Instant Access to grow their businesses on Amazon and other eCommerce sites.
About the Author
Victoria Sullivan is a Marketing Manager at Payability. She has over eight years of social media, copywriting and marketing experience. Prior to joining the Payability team, Victoria developed social media content and strategies for top technology brands such as Skype and Samsung. She holds a degree in Advertising from Syracuse University’s S.I. Newhouse School of Public Communications. She can often be found in a yoga class or working on her fashion blog.