Having your own Amazon business can be tough sometimes, especially when your revenue stream dries up and it’s difficult to inject necessary money into other areas. Amazon has a service to help you out called Amazon Lending, but is it the right approach for you? RepricerExpress takes a look at the details of Amazon Lending so you can make the best choice for you and your shop.

What Is Amazon Lending?

Amazon Lending has been around for a while, dating back to 2011 when it first started as a way to help out small businesses gain a stronger financial foothold. Since then, it’s given more than $3 billion in loans to clients in Japan, the UK and the US.

Amazon LendingIn today’s world, Amazon business owners typically get a loan, when successful, for an amount between $1,000 and $750,000. They then use this money to help them grow various aspects of their Amazon store, whether it’s by purchasing more inventory, running marketing campaigns, scaling up or whatever else their needs are.

How Does Amazon Lending Work?

As of right now, only users who sell on an Amazon marketplace are eligible for a loan through Amazon Lending. But not every Amazon seller can make use of the program, as it’s invite-only.

If you haven’t received a message from Amazon directly in your Seller Central account, then you’re not (yet) eligible.

To check if you could potentially qualify, make sure you can tick off all the following criteria:

  • You need to have an active Amazon seller account. Amazon will only invite you through your Seller Central account, so you need one as the absolute bare minimum.
  • Your account needs to be in good health with a proven selling track record of at least 12 months and the reviews to back it up.
  • You need to be at least 18 years of age.
  • Check your credit score, as it needs to be in good standing order.
  • Going back over the last six months, you need to have a sterling record when it comes to customer satisfaction (i.e. no customer complaints). You also need to be spotless when it comes to copyright or trademark infringement complaints over the last six months.
  • Make sure you’re always compliant with Amazon listing style guide requirements.

Once you’ve ticked off all these boxes, log into your Seller Central account to see if you pre-qualify for Amazon Lending. If you have, then you can select the amount and term you’d like, up to the full amount offered. After about five business days, you should see the funds deposited into your account and the process is done.

Or is it?

Just because you pre-qualify for a loan through Amazon Lending doesn’t mean you should max it out, so let’s look at some of the benefits and drawbacks.

Amazon Lending Pros and Cons

Right off the bat, the ease of the application process is one of the biggest benefits to the program. It’s not nearly as detailed or complex as getting a loan for a car or house, as you won’t need to provide bank statements, balance sheets, tax returns and all that lovely paperwork that’s usually required.

Instead, Amazon evaluates you based on your selling health and history. And you don’t have to prepare any kind of case or file, too. As said before, your pre-qualification will appear in your Seller Central account, with Amazon doing all the work.

It can be easier to get a loan through Amazon Lending than it might be through other avenues, as you won’t need to prepare documents proving your loan readiness. So, if you don’t qualify for other loans, then one from Amazon Lending could help you out.

Lastly, you’re able to borrow a potentially large amount of money through the program, going up to $750,000 as the ceiling. If you’re looking to make a big jump in scaling up, this could very well be the difference-maker for you.

However, Amazon Lending isn’t all roses and sunshine. For starters, the repayment term is over 12 months. For a small loan, you could probably pay that off quite easily. But for something bigger, like the maximum $750,000? That’ll equate to a huge monthly repayment amount.

And how about interest rates? While they’re not quite as bad as credit card companies, they’re still not in the market of mortgage interest rates. Each user will get a different rate, but we’re seeing about 16% as the typical interest rate on an Amazon Lending loan. The short repayment term will help with keeping your principal interest ratio fairly close together. And if you can repay the loan ahead of time, you’ll be keeping even more of the fees in your pocket. Just make sure you stay on top of payments because your inventory is used as your collateral.

Amazon Partners with Goldman Sachs

According to reports by CNBC, Amazon is introducing a new credit line for US sellers in a partnership with Goldman Sachs.

Small business owners who sell on Amazon.com will soon be invited to receive credit lines of up to $1 million. The offer will be advertised on Seller Central to potential borrowers and credit lines will have a fixed annual interest rate of 6.99% to 20.99%.

Read the full announcement on Amazon Seller Central.

Final Thoughts

One way to take maximum advantage of a loan through Amazon Lending is to restock highly profitable items, then use aggressive repricing to move them quickly and cash out. To do that, you’ll need RepricerExpress on hand to implement your pricing rules around the clock so you don’t lose a single second of profits. We’ve got you covered with a free trial when you sign up now, so get going right now to increase your profit margins.

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Related: 5 Funding Options for Amazon FBA Sellers