Financing For Amazon Sellers: What Is It And How Does It Work

If you’re an investor wanting to gain access to funds to sell at Amazon, you can take advantage of available financing options from various lenders. This is a huge help, as even the most popular online marketplace is also offering loans to sellers. We’ve gathered up-to-date information for those who need to know more about financing for Amazon sellers.  

Why Take Out Financing For Amazon Sellers? 

Whether you’re a beginner at Fulfillment By Amazon (FBA) or an existing seller, it’s essential to be aware that scaling your business can happen when you expand your inventory. Sometimes, however, cash isn’t always readily available for all sellers. They need working capital to buy more goods and perhaps pay for additional expenses. For sellers who have no other options, taking out a loan is another route to take.  

You’ll be happy to know that all is not lost, though, because financing for Amazon sellers, or FBA loans, is available at a few select sources online. There are financial platforms with loan products offering working capital solutions for growing your store and accessing sales information. Some also have features on analytical and payment solutions.   

How Does Financing For Amazon Sellers Work?  

Getting a small business loan or working capital is simplified with specific online platforms offering loan options. They offer a particular credit amount limit with a short approval time and flexible payment terms. Sometimes, they also have interest-only payment extensions. 

When you take out financing for Amazon sellers, you’re likely to experience the following benefits: 

1. More opportunities to offer seasonal sales 
2. You can introduce new products and still keep your inventory growing 
3. More budget for marketing and advertising 
4. Expand to overseas or international selling 

If you’re wondering about the paperwork needed for this type of loan, it will depend on the lender, so it helps to be ready for anything. If you’ve taken out a loan before, you’re likely to need the same requirements. In case you still need a guide, the following are the things you need to prepare before taking out a loan: 

• Application form 
• Valid tax returns 
• Personal and business KYC products 
• Bank statement 
• Financial profile 
• P&L account statement and balance sheet 

Application for business capital is easy, especially if you’re doing it online. Here are the steps to accomplish to go about your application process:  

• Create your account with specific personal information. 
• Connect your store to the platform. 
• Choose from among the available payment terms.  
• Receive funds if your application has been approved.  

Like any other type of loan, you will also need to be aware that it comes with fees aside from the interest rates. The tenure depends on the kind of loan, processing fee that can reach up to 3%, and the reclosure fee. 

Are There Different Kinds Of Financing Available?  

There are many other options for Amazon sellers to rely on, and these come with terms that could fit your business needs.  

SBA Microloan 

Small Business Administration (SBA) Microloans is a loan that anyone can apply for and is open to small businesses. Small business owners can use these microloans to jumpstart their trade and for expansion. It’s a good alternative for those with no existing or low credit scores. It’s also another way for those with little experience with running a business. Loan amounts can range from USD$500 to USD$50,000. SBA terms can last up to six years, with an annual percentage rate (APR) of 13%.  

Merchant Cash Advance 

A merchant cash advance (MCA) is released hours after its approval. Applications for MCAs are fast and straightforward, and the amount ranges from a few thousand dollars to around USD$200,000. MCA loans are charged a fraction of its daily sales by lenders, and the repayments are deducted from your credit or debit card. 

Personal Loans 

Lenders offer personal loans that you can use for anything, even for business. If you’re a beginner in Amazon selling, this can be an option for you. The loan amount can range between USD$2,000 and USD$50,000. You may depend on your income and assets when repaying this type of loan. APR typically reaches up to 36%, and like other loans, includes other processing fees. It also has flexible terms that can reach up to seven years.  

Conclusion 

Amazon sellers looking to grow their sales and those who want to try FBA can get financing without available capital. They can acquire a working capital from online sources specializing in loans that banks do not offer. However, it’s important to do your research to get the best terms that you can afford.