What Is The Amazon Merchant Cash Advance Program?
Amazon sellers may be eligible for Amazon loans through brand new merchant cash advance lending program. Is Amazon's Merchant Cash Advance right for you?
Amazon provides easy funding options for its sellers through its Amazon Lending platform. In November 2022, Amazon announced a new product addition to its suite of lending products: the Amazon Merchant Cash Advance.
Amazon Merchant Cash Advances are just another fast, hassle-free funding option for Amazon sellers, but is this financing right for your business? In this post, we’ll break down everything we know about Amazon MCAs to help you make the right decision for your business.
Table of Contents
- What Are Amazon Merchant Cash Advances? The Quick Answer
- The Cost Of Using An Amazon Merchant Cash Advance
- Qualifying For An Amazon Merchant Cash Advance
- How To Apply For The Amazon Merchant Cash Advance Program
- Should Your Business Get An Amazon MCA?
- The Bottom Line On Amazon Merchant Cash Advances
- Amazon Merchant Cash Advance FAQs
What Are Amazon Merchant Cash Advances? The Quick Answer
Amazon has partnered with Parafin to provide merchant cash advances to Amazon online sellers. Qualified borrowers can receive from $500 to $10 million through this program. This is a non-revolving form of financing that provides sellers with quick, easy access to funding. Qualified borrowers will pay a fixed capital fee through repayments that are tied to future sales. There is no interest, late fees, or additional fees charged to the borrower.
The Cost Of Using An Amazon Merchant Cash Advance
Merchant cash advances work differently than other types of small business funding. While you will receive a lump sum payment, an MCA is not a traditional loan. Instead, you are selling a percentage of your future sales in exchange for an upfront payment. Repayments are made by taking a percentage of your daily or weekly credit/debit sales, or a fixed payment may be taken daily or weekly from your business bank account.
Amazon MCAs do not have a traditional interest rate — like other merchant cash advances, this funding has a fixed capital fee that is repaid — along with the funds borrowed — over time. This fee is calculated using something known as a factor rate. While Amazon does not disclose its rates publicly, most MCA providers have rates of 1.09 to 1.6 — or 9% to 60% of the borrowing amount.
While MCAs don’t have credit score requirements, are quick and easy to obtain, and may be available to newer businesses, it’s important to note that this can be a very expensive form of financing. Additionally, daily or weekly payments can be disruptive to some businesses.
Before taking out a merchant cash advance from Amazon, make sure to carefully review the costs and terms before signing on the dotted line. Still unsure of the costs of MCAs and other short-term funding? Check out our post to learn more about how to calculate the cost of MCAs and short-term loans.
Qualifying For An Amazon Merchant Cash Advance
Amazon does not disclose specific criteria for qualifying for MCAs or other financial products.
However, in order to qualify, you must be an Amazon seller with a Seller Central account. You must also operate a U.S.-based business. Amazon states that you can become eligible at any time for funding through one or more Amazon Lending or third-party programs. There are no credit score requirements, and personal collateral is not required.
How To Apply For The Amazon Merchant Cash Advance Program
Amazon Merchant Cash Advances — in addition to all other financial products offered through Amazon Lending — are available by invitation only to qualified Amazon sellers. To see if you’ve received an invitation, simply log into your Seller Central account. If you have received an offer to apply for the Amazon MCA program, the option will be available to apply on your Seller Central homepage. From here, you’ll be able to select the financial product you wish to receive, as well as the amount.
Next, follow the instructions to fill out and submit the application. The time it takes to review and provide an approval decision for your application varies by product. Additional information and documentation may be required to process your application throughout the application process, which may add time to how long it takes to process, approve, and fund your loan.
Should Your Business Get An Amazon MCA?
If you have trouble finding financing elsewhere because of credit score challenges, collateral requirements, or the age of your business, an Amazon Merchant Cash Advance may be a good choice for you. If you’re an Amazon seller considering an MCA and want a quick, easy application process, it doesn’t get much simpler than applying right through Seller Central.
However, if you aren’t an Amazon seller, can obtain more affordable funding elsewhere, or want better rates and repayment terms, consider looking at Amazon’s other funding options or check out other lenders.
The Bottom Line On Amazon Merchant Cash Advances
Amazon Lending has opened up a number of funding opportunities, and its merchant cash advance program is just another financial resource for Amazon sellers. The program promises fast, easy, and transparent funding for qualified borrowers. This could be a solid funding option for borrowers that are having difficulty finding other funding due to poor credit scores, no collateral, or other challenges. However, as with other merchant cash advances, make sure that you’re fully aware of fees and repayment terms before you commit.
If you decide that an Amazon MCA isn’t right for you or you haven’t received an invitation, there are other funding options out there. Check out our picks for the top five same-day business loans and MCAs, or check out our small business loan comparison to find the funding your business needs. Good luck!