Amazon Lending Review
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- No credit score requirements
- Rates tend to be inexpensive
- Applicants can be quickly prequalified
- The application process is fast and easy
- Multiple avenues of customer support
- Only available to Amazon sellers
- No long-term financing options available
- Website advertising is not informative
Amazon is, in 2020, more or less the face of eCommerce. Consumers can shop online for everything from gift cards to electronics and apparel, while merchants can use the Amazon marketplace to reach consumers all over the world. Amazon has also ventured into lending by offering the Amazon.com Store Card and Amazon Rewards Visa Card to buyers, but what about sellers? For Amazon merchants, there is a business financing option you may not even know existed!
Through Amazon Lending, merchants can receive a short-term business loan to purchase inventory or expand their eCommerce business. If you’ve never heard of the program before, you’re not alone. The eCommerce giant doesn’t heavily promote Amazon Lending, and the application isn’t open to just anyone. Instead, this service is invitation-only.
Through Amazon Lending, qualified borrowers can apply for small business loans of $1,000 up to $750,000. These funds can be used to purchase inventory to sell on Amazon. If you’re an Amazon seller or plan to become one in the near future, read on to learn more about this financing opportunity.
Table of Contents
- Short-Term Business Loans: Amazon offers a variation on the short-term loan. Short-term business loans extend the borrower a lump sum of cash for (typically) a flat fee. Repayments are made daily or weekly over a loan’s term, which is usually under one year.
In addition, Amazon sellers can access some lending products from third-party entities, such as Goldman Sachs, which offers a line of credit.
To receive an Amazon Lending short-term loan, you must receive an invitation from Amazon. Only registered sellers are eligible.
Loan offers are made to sellers that would most benefit from a loan to expand their businesses. Sellers must have an Amazon selling history of at least one year. Plus, sellers must have had total sales of at least $10,000 in the previous year.
Amazon Lending will also evaluate Customer Satisfaction metrics and the seller’s compliance with Amazon Style Guides. Customer complaints within the last six months and outstanding copyright or trademark infringement complaints will also be taken into consideration.
Terms & Fees
|Repayment Terms:||Up to 1 year|
Amazon Lending has not publicly disclosed the specific terms and fees associated with its loans. However, the company has stated that interest rates for its loans are lower than typical interest rates for business credit cards. For reference, most business credit cards have interest rates from around 14% to 24%. Past and current Amazon Lending borrowers report receiving annual interest rates as low as 6% up to 14%.
Loans from Amazon Lending have terms up to 12 months. Fixed payments are automatically deducted from your Amazon account each month. You may also choose to have your payments taken out bi-monthly if that works better for your business. If your Amazon account has insufficient funds to cover your monthly payment, the payment method linked to your account will be charged. If Amazon can’t pull the funds from your account, the company has the right to seize inventory and sell it to pay off your debt.
The application process for Amazon Lending is simple. Unlike most loans, you won’t have to seek out the application yourself. Instead, you’ll receive an invitation through the Seller Central homepage and your email address linked to your Amazon Seller account.
Once you receive your invitation, you have three options. First, you can accept the loan offered to you. You can also decline the loan. Finally, you can lower the borrowing amount if you choose.
Amazon Lending is different from other lenders in its paperwork requirements. Most small business loans require a lot of personal information and documentation. Since Amazon Lending’s loans are based on the performance of your Amazon business, the company already has most of the information it needs. You won’t have to gather your tax returns, credit reports, and other documentation.
Once you’ve received your invitation, fill out the short application and select the amount you wish to borrow. Most loans are approved within 24 hours. It’s important to note that even with an invitation to borrow, you may still be declined following Amazon’s review of your account.
Sales & Advertising Transparency
Amazon Lending does not promote its service to just everyone since it’s an invitation-only financial service, so a lot of the information about the product isn’t readily available. Therefore, anyone that has not received a loan offer will not be able to see details about the rates, terms, and details of Amazon Lending’s products. However, sellers that have scored an invitation report receiving clear rates and terms for the loans that are offered.
Customer Service & Technical Support
Amazon offers multiple customer service outlets for Amazon Lending customers. Borrowers can contact Amazon Lending by phone or through a dedicated email address. Borrowers can also use the Seller Central dashboard to view information about their loan or ask and respond to questions about loans using the Amazon Services Seller Forums.
Negative Reviews & Complaints
Because Amazon Lending is an invitation-only service available to Amazon sellers, finding reviews and testimonials is a little tough. Likewise, it’s difficult to isolate Amazon’s Lending activities from all of its other endeavors for the purpose of customer reviews. However, sellers have taken to the Amazon Services Seller Forums to discuss the benefits and drawbacks of Amazon’s lending service. The most common complaints include:
- No Future Loan Invitations: Some borrowers reported being dissatisfied about not receiving invitations to refinance. Others reported that after paying off their loans, they were not offered additional financing.
- Rates & Terms For Refinancing: Some Amazon sellers that received refinancing offers complained that the new loans came with less favorable terms and rates.
- Six-Month Terms For New Borrowers: Several first-time borrowers say that they were only given terms up to six months for their loans. Borrowers who have received multiple loans reported that additional term options of nine months and 12 months were made available after paying off the initial loan.
- Potentially High Cost Of Borrowing: Some Amazon sellers that received loan offers expressed concerns over a high cost of borrowing. For others, however, the convenience of obtaining the loan was worth the additional costs.
Positive Reviews & Testimonials
- Easy Application Process: Borrowers that have accepted loans from Amazon Lending liked how easy it was to apply for the loan and receive funding. Though some borrowers reported that rates were higher than those of a bank loan, many felt that the easy application process was worth the extra expense.
- Low Credit Requirements: Other borrowers liked that personal credit scores were not an important factor in loan approvals. These borrowers reported that they were unable to obtain credit from other sources but received large business loans from Amazon Lending without any hassles.
- High Borrowing Limits: Borrowers also liked the high borrowing limits provided through Amazon Lending.
- Potential For Multiple Loans: Even though some borrowers complained that they did not receive additional loan invitations, other Amazon sellers said they have received multiple loans. Amazon claims that over half of the small businesses that have received loans return for a second loan.
If you’re an Amazon seller that is ready to boost your eCommerce business and increase your inventory, a loan from Amazon Lending may be right for you. Unfortunately, you don’t get to decide as to when to take the loan since this service is available only by invitation.
However, if you continue to make sales and abide by Amazon’s policies, you may get an invitation sooner than you think. If and when you do receive an invitation, carefully evaluate the total cost of borrowing and your monthly payments to make sure it’s an offer your business can handle.
Amazon Lending’s competitive rates and relaxed credit requirements make it a great choice for borrowers who don’t qualify for other types of financing. However, the fact that you must wait to receive a loan invitation, combined with rigid requirements that only allow you to purchase inventory, may mean that Amazon Lending is not the best option for your business. If you need more flexible financing options, consider applying for a line of credit or business credit card.