American Express Merchant Financing Review
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- Date Established
- New York City, NY
- Suited for small businesses
- Rates tend to be inexpensive
- No additional fees
- Discounts for repaying early
- Funds are disbursed quickly
- Website advertising is clear and informative
- Unsuited for startups
- Only available to businesses that accept American Express
- Repayments are required frequently
Note: As of October 2020, AMEX provides the following “COVID-19” update on its website for American Express Merchant Financing:
We appreciate your patience as we navigate this unprecedented time. Our customer care teams are hard at work to help you, but wait times are higher than normal. At this time, we are currently not accepting applications.
Created in 2011, American Express Merchant Financing is Amex’s contribution to the world of short-term business loans. The company offers business loans with term lengths of six months, 12 months, and 24 months.
Although they are technically business loans, in some ways, Merchant Financing products resemble merchant cash advances. Instead of interest, the company charges a one-time fixed fee that is repaid along with the principal. To repay, Amex usually collects a percentage of your daily sales.
However, Amex loans tend to be less expensive than MCAs. While cash advances notoriously have fees that range from about $0.10-$0.60 per dollar borrowed, Amex fees will land somewhere between $0.0175 and $0.28 per dollar. Borrower fees are determined by the strength of the business, the loan term length, and other factors.
Amex Merchant Financing is available only to businesses that accept American Express cards. Additionally, to have a good chance of qualifying, your business has to be at least two years old and make over $50,000 annually (see Borrower Qualifications below). These loans can be used for most business purposes.
Is Amex Merchant Financing right for you? Keep reading to find out!
Table of Contents
Amex offers short-term small business loans, which are available to qualified merchants that accept American Express cards. American Express Merchant Financing Loans have automatic daily repayments and term lengths of six months, 12 months, or 24 months. These are fixed-fee loans, and if you pay it off early, you will receive up to 25% of the fixed fee back.
To qualify for a loan from Amex, your business must accept American Express cards. Additionally, you must meet these requirements:
|Time In Business||2 years|
|Business Revenue||$50,000 per year|
|At least $12,000 per year in debit and credit card sales|
Note that if you’re interested in two-year financing, you must have a minimum 24-month history of processing this company’s cards.
American Express also considers applicants’ creditworthiness, but it does not list any specific credit score minimum.
Amex can work with businesses in most industries, but it cannot work with nonprofits, most financial services, and businesses in other high-risk industries.
Terms & Fees
Amex Merchant Financing offers loans with repayment lengths of six months, 12 months, or 24 months. Note that for loans > $35K and ≤ $2M, Amex offers six-month, 12-month, or 24-month terms; for loans ≤ $35K, it only offers a 12-month term. Here are the details:
|Term Length||6 months, 12 months, or 24 months|
|Fixed Fee||For 6-month loans: 1.75%-7% of the borrowing amount|
|For 12-month loans: 3.5%-14% of the borrowing amount|
|For 24-month loans: 7%-28% of the borrowing amount|
|Effective APR||Learn more|
|Collateral||Business assets, excluding real estate and motor vehicles|
|Possible personal guarantee on 12-month loans under $35,000|
Merchant Financing loans differ from traditional installment loans in a few ways.
First, these loans do not carry interest. Instead, borrowers will have a fixed fee, which is repaid along with the principal. For example, if you have a 12-month loan of $100,000 and your fixed fee is 3.5% of the borrowing amount, you will have to repay a total of $103,500 — the principal amount of $100,000, plus a fixed fee of $3,500.
Because the fee is predetermined, technically, you cannot save money on fixed fees by repaying your loan early. (For comparison, because interest charges accrue over time, you can halt the charges by repaying early.) However, Amex offers a rebate of a percentage of the fee, depending on how early you repay your loan. Here is how early you have to repay your loan to qualify for the 10% and 25% rebates:
|25% rebate||10% rebate|
|Six-Month Loan||Within 90 days||Within 135 days|
|12-Month Loan||Within 180 days||Within 270 days|
|24-Month Loan||Within 360 days||Within 540 days|
Amex loans also differ from traditional loans in how they’re repaid. You will have to make daily repayments on your loan, and, in most cases, your payments will not be fixed. Amex has quite a few different ways to repay your loan:
- Deducting a daily percentage of your Amex receivables
- Working with your credit card processor to deduct a percentage of all your credit and debit card sales
- Setting up a business “transfer account” from which Amex can deduct a percentage of your daily sales before sending the bulk to your regular business bank account
- Deducting a fixed fee from your bank account each day via ACH
Your repayment method is determined by American Express based on your creditworthiness and other factors, including the particulars of your loan and your processing history with American Express.
As you can see, in most cases, Amex will be deducting a percentage of your daily sales. Because your sales fluctuate, you will pay more when you make a lot of money and less when you don’t make as much.
If you fall behind on payments, Amex might increase the percentage it withdraws, or debits, from your bank account. Late payments might incur a late fee (the greater of $39 or 2.99% of the past-due amount). However, aside from the fixed fee and potential late fees, Amex does not charge other fees, such as origination fees, application fees, or maintenance fees.
You can kick off the application process online or over the phone. Amex advises having this documentation on hand before you start:
- Tax ID or American Express Merchant account number
- Total annual credit and debit card receivables
- Credit card processor name and number
- Total annual business revenue
- Total annual personal income
- Social Security number
- Date of birth
- Percentage of ownership
- Type of business entity
- Business bank account details (bank name, routing number, account number)
You might also be asked to provide other documents, depending on your situation. Amex will evaluate these documents and your account to decide if you’re eligible for a loan.
If you are approved for a loan, and you agree to the terms, the funds could be available as soon as the next business day. However, availability depends on other arrangements Amex has to make, such as talking to your credit card processor or setting up a bank account for fund transfers. Regardless, funding should not take more than a few business days.
Sales & Advertising Transparency
Amex provides a fair amount of information on its website. You should have a pretty good understanding of how the whole thing works before deciding whether or not to apply for a loan.
Customer Service & Technical Support
Amex is available by phone. Businesses working with Amex are assigned a single representative who remains their contact throughout the loan’s life.
While I’ve found very few reviewers responding specifically to how customer service reps handle financing questions and concerns, Amex’s customer service as a whole has a very positive reputation on the web.
Negative Reviews & Complaints
Amex currently has over 150 negative reviews and over 3,000 complaints on the Better Business Bureau. However, very few of them are about Merchant Financing. Amex’s loan service also doesn’t have many customer reviews elsewhere on the web.
Regardless, here are some reasons an Amex loan might not be right for your business:
- Delays & Communication Problems: A few borrowers in our comments section have reported that they experienced funding delays and communication problems.
- Short Term Lengths: The longest term length Amex offers is two years. Because you will have to repay the capital relatively quickly, these loans will probably not work for long-term projects.
- Daily Withdrawals: Amex will deduct money from your business every day. If you’d prefer less frequent payments, you might want to look at some other options.
- Changing Withholding Limits: If you fall behind on your payments, Amex might increase the withholding limit until you get back on track. While this may be frustrating, Amex fully discloses this information on its website.
- Not For Young/Unstable Businesses: Amex only lends to businesses with a strong profile. If your business does not have stable financials and strong personal credit, you are unlikely to qualify for a loan. Don’t think you’re qualified? Check out a comparison of some of our favorite business lenders for other options.
Positive Reviews & Testimonials
Amex has a few customer testimonials on the funding page of its website. Here is what they like about Amex Merchant Financing:
- Competitive Fees: Amex’s fees are lower than many others in the short-term lending space. Additionally, this is one of the few lenders that does not charge an origination fee.
- Automatic Repayments: No checks? No problem!
- Online Tracking: Track how much you’ve paid off and how much you still have left to go.
- Reimbursements: With a possible 25% reimbursement, if you pay your loan off early enough, Amex’s early repayments deal is certainly one of the best we’ve seen.
If you have any experiences with Amex Merchant Financing, we’d love to hear from you. Good experience or bad, leave a message in the comments.
Loans via American Express Merchant Financing carry reasonable fees and easy methods of repayment. If you run a stable business with daily income, accept Amex cards, have strong personal credit, and need a short-term loan, Amex Merchant Financing is undoubtedly a resource worth considering.
Some businesses might find that they want more extended term lengths or fixed monthly repayments. If that describes you, Amex isn’t your only financing option; there are plenty of other lenders that might have what you’re looking for. Otherwise, Amex Merchant Financing is an excellent source for businesses in need of working capital.