Amazon Lending: 9 Funding Options for Amazon Sellers

Virginia Miller

September 15, 2024

In this article

If you're an eCommerce seller, you know that funding your business is not a small task. The more money you have in the bank, the easier it will be to focus on growing your business and improving customer service. However, suppose you're like most sellers and have been unable to get enough cash flow from traditional lending sources (like banks). In that case, several options are still available for funding your eCommerce business.

Overcoming Cash Flow Challenges for Small Businesses

As a small business owner, having enough working capital can be an ongoing struggle. However, there are financing options available that can provide the funds you need to keep your business running smoothly.

Do I Need Insurance to Get a Small Business Loan?

Contrary to popular belief, small business loans don't always require having insurance. Insurance is often only mandatory for larger loans or businesses with high debt-to-income ratios. For many small businesses, insurance is not a prerequisite for securing financing.

Comparing Your Financing Options

Before applying for a loan, compare interest rates and terms across multiple lenders. Checking your credit score and report ahead of time allows you to better understand what terms you may qualify for. Recent credit events like late payments can negatively impact your rates.

9 Funding Sources to Consider

1. Amazon Lending

Amazon offers loans to sellers on its marketplace. Rates are around 2% and funds can be used to buy Amazon inventory. Eligibility is based on sales history and feedback ratings.

2. Vendor Express Financing

Amazon pays your suppliers directly and you repay the loan in installments. Available to high-volume sellers with $25K+ in annual revenue.

3. PayPal Working Capital

Borrow up to $50K that is repaid as a percentage of your PayPal sales. No collateral required and competitive fixed fees.

4. Payability

Offers small business loans from $5K-40K for inventory, marketing, and other needs. 12-month term with fixed interest rate and no credit check.

5. QuickBooks Loans

Peer-to-peer lending platform where you can borrow up to $50K. Funds provided in 90 days to pay suppliers.

6. Payday Loans

Expensive short-term loans for small amounts, usually under $1K. Must be repaid quickly to avoid high fees.

7. Crowdfunding

Raise funds from a large pool of investors. Compare platforms based on fees, business types supported, and company reputation.

8. Overdraft Protection

Protects against overdrafts up to $250. Small monthly fee based on account balance. Cheaper than paying individual overdraft charges.

9. Purchase Order Financing

Receive interest-free funds that can be used flexibly for inventory, suppliers, or other needs.

Get Expert Advice

Speaking with a professional risk manager can provide unbiased guidance on the best financing options for your unique situation. They can weigh pros and cons of different types of small business loans.

For help optimizing your ecommerce shipping and fulfillment, contact Simpl Fulfillment. We assist online sellers with accessing the tools and services they need to succeed.

FAQs

Do I need insurance to qualify for small business loans?

No, insurance is not always required, especially for smaller loans. High debt-to-income ratios or large loan amounts may necessitate insurance.

What credit score is needed for small business financing?

Requirements vary by lender, but a credit score of 650 or higher will qualify for most small business loan programs.

How much money can I borrow from Amazon Lending?

Amazon Lending offers loans up to $1 million, with specific loan amounts based on your sales history and other eligibility factors.

Does PayPal Working Capital require collateral?

No, PayPal Working Capital does not require any business or personal assets to be put up as collateral to secure the loan.

What fees and rates come with crowdfunding?

Crowdfunding platforms charge various fees and you also offer rewards or equity to investors. Compare total costs across different platforms before choosing.

Can I get a payday loan for my business?

Yes, but the fees and interest rates on payday loans are extremely high. Only use them as a very last resort for immediate cash flow emergencies.

Is purchase order financing the same as a bank loan?

No, purchase order financing involves selling outstanding invoices or purchase orders to an investor. You receive funding more quickly without interest or strict repayment terms.