Amazon Lending: loans for Amazon Sellers

Amazon’s marketplace presents a significant opportunity for businesses seeking to expand, and having the right financing in place can make all the difference. Amazon Lending offers several finance options for its seller network, so whether you’re an established Amazon seller or just getting started, understanding how it works will help you decide if it’s the right funding option for your needs.

In this article, we break it down for you, outlining the pros and cons of Amazon Lending, eligibility criteria and what alternatives you may want to consider. 

What is Amazon Lending?

Amazon Lending is a business funding program designed specifically for Amazon sellers. It provides short-term loans that can help sellers finance inventory purchases, marketing efforts and other business expenses. 

Amazon’s 2024 Small Business Empowerment Report revealed that 60% of sales in the Amazon store are from independent sellers, most of whom are SMEs.

The program offers loans with widely ranging borrowing amounts, from as little as £500 right up to £5 million, making it accessible to both newcomers and more established businesses. 

One of the key benefits of Amazon Lending is the simplified application process that’s integrated with the Amazon platform itself, meaning that they already have much of the data they need to assess your business.

How does Amazon Lending work?

Amazon Lending offers three main financing options for UK sellers, which work in slightly different ways – here’s brief summary of the lending options:

1. Term Financing: Amazon’s term financing option is a term loan with a fixed interest rate that enables Amazon sellers to invest in inventory, equipment or other areas requiring funding with predictable monthly repayments.
2. Merchant Cash Advance (MCA): This provides a lump sum of cash that you can use for any business-related expenses. Unlike standard loans, repayments are set as a percentage of your future Amazon sales, allowing for flexible repayments that adjust with your cash flow. This can be helpful if your sales fluctuate seasonally or from month to month​.
3. Flexible Financing Line (FFL): If you’re not sure how much you need, this provides a pre-approved business line of credit that you can draw from as needed. It offers a flexible way to access funds for ongoing needs without incurring any costs until you use the available credit. Repayments are also tied to your Amazon sales, and there are no interest charges – just a one-time fixed fee​.

Who is eligible for Amazon Lending?

Amazon Lending is offered exclusively to eligible Amazon sellers through an invite-only program. The eligibility for Amazon Lending (other than needing to be an existing Amazon seller) depends on several factors, including:

• Your sales performance (ideally showing growth over many months)
• Account health
• Customer satisfaction for products sold through Amazon
• Other key metrics tracked by Amazon and lending partners 

Generally, Amazon extends loan offers to businesses that have demonstrated a strong sales history and positive account health. If you want to learn more about your eligibility and what funding you may be able to get, follow these steps:

1. Log in to Seller Central: Check if your business is eligible for Amazon Lending offers.
2. Review your options: If eligible, review the available loan products and read the terms carefully to understand the rates/fees and your requirements.
3. Apply: Select the financing option that best suits your needs and complete the application without impacting your credit score​.

Pros and cons of Amazon Lending

Getting funding directly through your Amazon account is a simple funding route for Amazon sellers, so long as you’re eligible. However, there are other advantages and potential drawbacks for businesses seeking finance from Amazon.

Here are the main key pros and cons of Amazon Lending to consider:

Benefits of Amazon Lending

• Quick access to funds: Eligible sellers can receive funds within one business day of approval, allowing for rapid response to business needs​.
• No hidden fees: Amazon Lending features straightforward repayment terms with no additional hidden fees, making it easier to manage your financial commitments​.
• Sales-based repayments: When using Amazon’s MCA or line of credit solutions, repayments adjust to your sales volume, which helps to overcome cash flow problems in slower sales periods and seasonal dips.
• Flexible funding options: You can choose between a term loan, standard cash advance or flexible advance (line of credit to draw from), meaning there are several options to suit different business needs and financial situations.

Drawbacks of Amazon Lending

• Limited availability: Amazon Lending is only available to select sellers based on invitation, which restricts access for newer or lower-volume sellers​.
• Lack of initial transparency: The terms and conditions are not publicly disclosed, making it challenging to compare Amazon Lending with other financing options until you’re actually offered funding​.
• Fixed repayment rates: While the revenue-based repayment model in MCA and credit line options aligns repayments with sales performance, the fixed rates offered can often be higher than other financing alternatives, depending on your performance and credit​worthiness.

Alternatives to Amazon Lending

If Amazon Lending isn’t the right fit for you or you’re ineligible, here are several alternative financing options suitable for Amazon sellers to consider:

1. Small business loans

Small business loans are often unsecured (meaning no business assets are required as collateral) and quick and easy to access with flexible repayment terms. For example, iwoca provides unsecured business loans tailored to your online business needs. 

Our Flexi-Loans are designed for SMEs, offering fast access to funds without the need for long applications or assets as security. You only pay interest on the funds you draw down, and there is no charge for early repayment.

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‍2. Inventory finance

If you’re looking to stock up on new products or raise money from unsold stock, consider exploring inventory finance. It provides businesses with the capital needed to purchase stock by using existing or purchased products as security. 

This type of financing is ideal for businesses needing to maintain high inventory levels, especially during peak seasons or when expanding product lines. You can access funds to keep your shelves stocked, take advantage of bulk purchasing discounts, or manage seasonal demand, without incurring cash flow issues.

3. Invoice financing

Using invoice finance allows businesses to unlock cash tied up in unpaid invoices, providing a quick injection of working capital. This option is particularly beneficial for businesses that sell wholesale to Amazon or other retailers, as it helps bridge the gap between invoicing and payment. 

In most forms of invoice financing, including invoice discounting and factoring,  you can access up to 90% of the invoice value almost immediately, which can significantly improve cash flow, allowing you to reinvest in your operations, pay suppliers on time, or take on new opportunities without waiting for your customers to settle their accounts.

Choosing the right financing for your Amazon business

Amazon Lending offers a convenient way for eligible Amazon sellers to access funding, designed to meet the needs of ecommerce businesses in the Amazon ecosystem. However, weigh up the pros and cons outlined above and consider alternative funding options to judge what is most suitable for your working capital requirements and growth ambitions.

Ask yourself how much you need, how long you need it for, where the funds will be used, what flexibility you require and the costs and risks you’re willing to take on.

For UK Amazon sellers looking for a versatile and hassle-free financing option, iwoca’s Flexi-Loan is ideal. You can borrow between £1,000 and £1 million for a few days up to 60 months. We’ve helped over 150,000 UK businesses access the capital they need to grow.

Apply for a flexible business loan in minutes and get a decision within 24 hours – successful applicants can usually access the funds in a matter of hours.

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Amazon Lending FAQs

Still got questions? Here are a few common queries about Amazon Lending:

What credit score do you need for Amazon Lending?

While there is no specific credit score that can guarantee funding through Amazon Lending, a solid credit history is always helpful when seeking business finance. However, Amazon’s lending criteria are more focused on your seller performance and revenue growth than your credit profile. 

Can new sellers get Amazon Lending?

As Amazon Lending is an invite-only funding program based on Amazon sellers’ sales history and performance, new sellers may need to wait until they’ve proven their success before being offered credit. Typically, you need several months (or up to a year) of solid sales data and consistent performance on Amazon to access the lending facilities.

Are repayments flexible with Amazon Lending?

Yes and no. Amazon Lending facilities are revenue-based funding solutions; therefore, repayments are variable rather than necessarily flexible. So, yes, they are flexible in terms of moving up and down in line with your level of card sales, but you pay a fixed percentage of your sales towards the advance until the loan is repaid, which is decided at the start of the agreement.

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