With the holiday season just around the corner, you’re probably considering the best way to market and sell your Amazon inventory. You can access the Amazon lending program to gain quick funds for your business as an Amazon reseller. However, is taking out an Amazon business loan via the lending program worth it for you?
The Amazon lending program isn’t the best option for small businesses or resellers. The lending program offers up to 750,000 in Amazon business loans or a line of credit. While this option exists for resellers, there are much better options available. For example, Amazon inventory financing via BitX Funding offers up to $10 million in financing. Further, while Amazon offers favourable interest rates, you can only spend the money through Amazon, are locked into automatic repayments, and have much shorter terms than traditional loans.
While business loans through the Amazon lending program sound great, they are not the only option available. Read on to learn more about the Amazon lending program, business loan options, and how you can get fast liquidity to prepare for the upcoming holiday season.
What is an Amazon Business Loan?
Amazon business loans are a financing option used to supplement an Amazon reseller’s retail expenses. The primary purpose of these loans is to allow smaller retailers to purchase large amounts of products. These loans provide the necessary equipment to sell during peak times of the year.
This financing option is most popular at the end of the year as resellers prepare for the holiday season. Additionally, loan options are available directly through the Amazon lending program but can come from virtually any source, including third-party lenders.
What is the Amazon Lending Program?
The Amazon lending program is a lending option offered by Amazon to help resellers supplement their business and purchase large stocks of inventory to resell. Amazon began this program in 2011 to support their participant resellers to make more money.
The three primary lending options Amazon offers are:
- Short-Term Loans: standard loans up to $750,000.
- Interest-Only Loans: standard loan with an interest-only repayment window up front.
- Business Line of Credit: revolving LoC through Marcus by Goldman Sachs
While Amazon provides “convenient financing options for your business,” they give very little detail on what they offer, and their program is invite-only. To access their lending program, you must be a registered Amazon reseller, have a proven sales record, and be in good standing with Amazon. Other financing options via third-party lenders are available for resellers who don’t meet these requirements because they are new to Amazon.
What Does the Amazon Lending Program Offer?
Amazon offers loans on 3, 6, 9, or 12-month terms anywhere from $1k on the lower end to a maximum of $750,000. These loans have fixed payment plans, and you can only use the money you borrow within or towards Amazon. Additionally, there is the LoC option, which allows you to draw funds as you need them without fixed payments. Each seller receives different terms depending on their credit score and seller history with Amazon.
Because Amazon only shows terms to qualified resellers, it’s impossible to denote their actual terms and if those terms compare favorably with other third-party lenders. However, Amazon does promise fast turnaround rates for their collateralized loans.
What Are the Drawbacks of the Amazon Lending Program?
While the Amazon lending program is a plausible option for resellers, it may not be the best option for your business. Drawbacks of receiving business loans through the Amazon program include
- Difficulty in qualifying
- The obscurity of the terms
- Limited flexibility
- Funds cap at $750,000
Overall, the most significant disadvantage is that you can’t compare your Amazon business loan through the program with traditional loans elsewhere. You can only view terms if Amazon has invited you to the program, and only accept the terms they give you. Further, you can only receive loans from Amazon if you’ve made a profit through Amazon, have a suitable credit score, and maintain a specific customer rating on Amazon. Newer resellers who don’t qualify are in the dark.
Additionally, if you use the Amazon lending program, you can only use those funds for Amazon inventory purchases, and Amazon caps the funds at $750,000. While this may be suitable if Amazon sales are your primary profit source, it doesn’t help if you require funds for external business expenses.
Fortunately, third-party lending options exist for Amazon resellers that provide opacity, flexible spending options, and loans up to $10 million.
Are There Other Amazon Business Loans for Amazon Resellers?
While Amazon offers business loans for qualified resellers, it’s not necessary to get those funds from Amazon. Many lending options are available for small business owners and resellers, with favourable terms and funds far exceeding what Amazon is willing to offer. In many cases, short-term, midterm, or asset-based (AB) loans offer better terms than the non-negotiable and invite-only loans Amazon offers.
While you can take out small business loans to get the funds you need, one of the best options available to fund your business is Amazon inventory financing through BitX Funding.
What is Amazon Inventory Financing?
Amazon inventory financing is a lending option that allows you to finance up to 80% of your inventory’s liquidation value with funds up to $10 million. The funds are available as a line of credit, with 20% of the value held back with a 2% fee.
The total line of credit is determined by looking at your equipment’s liquidation value, and you only need to draw funds as you require them. You can also elect to pay monthly interest charges only if you don’t need the funds immediately. It takes less than a week to underwrite the loan and about 3–4 weeks to receive the funds. Once you set up your inventory financing, you are free to use the funds to purchase equipment to grow your business.
What Can Third-Party Lenders Offer That Amazon Doesn’t?
Third-party lenders, such as BitX funding, are here to help you grow your business and succeed as an Amazon reseller. Overall, going with an independent lender over Amazon affords the following advantages:
- Easy to qualify for
- Crystal clear terms
- Flexible spending options
- Funds cap at $10 mil (with BitX inventory financing)
You can be confident that you’re being taken care of by an independent lender, especially one that promotes and grows small businesses. You never have to worry about what the terms will be, whether you’re invited, how you can spend the funds, and not having enough funds to grow adequately.
Overall, third-party lenders can offer opacity and flexibility, ensuring you get your funds when you need them most.
Get Amazon Business Loans Today With BitX Funding
With the holiday season right around the corner, Amazon resellers are in a solid position to sell their inventories and grow their businesses for 2023. Many Amazon business loan options are available, including the Amazon lending program. However, while Amazon’s lending program is designed for Amazon resellers, it may not be the best funding option for your e-commerce business.
Amazon business loans cap at $750,000, are restricted to Amazon inventory purchases and have no terms until they select you for their program. In comparison, the Amazon inventory financing program through BitX funding offers up to $10 mil in funds, has far greater flexibility, doesn’t hide its terms, and is open to all.