Amazon Lending: 6 Funding Options for Sellers

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One of the most important ways to take an Amazon retail business to the next level is to expand your inventory – but this often requires an infusion of working capital, and unless you have thousands of dollars sitting around in a bank account, it can be hard to get the cash that you need to grow your Amazon business unless you get loan.Deciding when to take the plunge and obtain funding for a business is a big step. If you get working capital too soon, before your business’s revenue potential is ready to take off, you could find yourself in debt and unable to pay the loan back. If you wait too long, you may miss out on valuable opportunities to take advantage of vendor specials, or purchase bulk inventory at the right the right price. Getting an Amazon business loan – in the right amount and at the right time – is the ideal answer to grow your online business.

However, one disadvantage that Amazon sellers face is that traditional banks often don’t know what to do with online businesses or small Amazon retailers – there are no “Amazon loans” at most banks, which are accustomed to dealing with brick-and-mortar businesses that have physical collateral. Because it can sometimes be difficult to obtain a loan without collateral, this adds complexity to the business-lending environment. Even if you’ve been in business for several years and have a great track record of online sales, it might be hard to qualify for a traditional small business loan from a bank. Also, traditional banks usually don’t want to lend smaller amounts of money, so it can be hard to get a bank loan for under $100,000 because banks want to focus on bigger loans that are more profitable for them to issue. So what is an online seller to do?

Before you decide to apply for business funding from a bank or alternative lender, it helps to think like a bank. Banks use certain metrics to determine if you’re a good credit risk or if you’re likely to default on the loan. In the same way, if you do a careful review of your finances and your business cash flow, you can figure out whether it makes sense to borrow and how much you can afford to take out. Also, think about your goal for borrowing the money. Do you want to purchase inventory to be ready for a busy sales season? Do you have a chance to get a great deal on a bulk purchase of hard-to-find products? Do you want to launch a new marketing campaign or advertise online? If time is of the essence, you might want to go with an alternative lending option that can deliver quick cash with a shorter application and approval process.

Fortunately, there are more options than relying on banks for Amazon sellers to get working capital to help grow their business. These types of loans include:

Merchant Cash Advances (MCA) 

This type of financing works by getting a cash advance based on the purchase and sale of your future credit card income. There are no regular fixed payments with merchant cash advances, but the lender will collect a set percentage of your daily credit card sales. Oftentimes, this type of funding doesn’t have a fixed interest rate, but it can still be expensive in terms of the overall cost to borrow.

Peer-to-Peer Financing (P2P) 

Another source for an Amazon business loan is a peer-to-peer lending transaction. You post the amount you want to borrow on a peer-to-peer lending site and specify what you want to pay in interest. Then, potential lenders bid on your loan. A good personal credit history is necessary for this type of Amazon business loan.


Did you know you can sell your accounts receivables to raise money, too? This type of loan is called ‘factoring’ and typically has higher rates than traditional bank loans, but it is also much more readily available.

Credit Cards

This is not always the best idea for an Amazon loan because of the high interest rates, however, business credit cards can sometimes be used in a pinch when you want to finance short-term expenses. To keep costs down, make sure to pay on time and negotiate with credit card companies to receive the lowest interest rate possible.

Kabbage’s Amazon Loans

Another way to get business funding for your Amazon business is to sign up for line of credit from Kabbage. Unlike Amazon loans from banks and business credit card companies, Kabbage looks at your business data, not just a credit score, through our fully automated, online application. Link the services you use to run your business, and we’ll instantly review your business health. Your funds will be in your account in anywhere from a few minutes to fewer than three days. No paperwork, faxing or waiting in line. It’s free to sign up, and there’s never an obligation to take the money – access your line of credit only when you need it.

Kabbage was set up with the goal of providing working capital to small businesses that were being underserved by the traditional bank-lending model; our small business loans are especially relevant and accessible to online retailers such as Amazon sellers.

Amazon Lending

During the past few years, Amazon has started to offer direct loans to Amazon sellers in the form of the Amazon Lending program, where Amazon’s online sellers can borrow working capital from Amazon at rates that are typically less than a credit card. The Amazon Lending program works similarly to Kabbage in that it’s a simple online application process, the loan amounts are smaller than a traditional small business loan from a bank, and the money can be available very quickly.

However, there are a few differences between Amazon Lending and Kabbage’s Amazon loans. With Amazon Lending, it’s an invitation-only program: Amazon selects the sellers (based on online sales history) that it thinks are going to be the best fit for an Amazon Lending loan. That means that even if you really want a loan and have good sales history, you can’t just go out and apply for Amazon Lending unless Amazon has invited you.

Another difference in loans from Amazon Lending is that it might make you feel too beholden to Amazon – you’re already selling on Amazon’s platform, using Amazon’s marketing tools, and perhaps using Amazon Fulfillment Services to package and ship your products to buyers; do you want to owe money to Amazon as well? Working with a different loan provider might make you feel more independent, instead of starting to feel like you’re one step away from an employee of Amazon. This is something to consider.

Before deciding on the type of loan you need for your Amazon business, consider what you want to do with the money, how soon you need the money, how much money you need, and how long it will take you to pay it back. Having the working capital you need to achieve these objectives will make it that much easier to run your small business. And, with this information in hand, you will be able to make a strategic decision about your funding options, which will give you the best chance to maximize any funding option you choose.

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