Running a business is no easy endeavor, whether you manage a restaurant or an eCommerce storefront. More often than not, you need to wear multiple hats, from dealing with customers to handling inventory through platforms like Amazon FBA. As any seller knows, managing your finances is the most critical aspect of this. It's crucial to have a plan in place to keep your business in the black and to set you up for long-term success.
Studies have shown that a staggering 95% of Amazon sellers struggle to keep their company alive within the first year. While this is due to several factors, including poor inventory management and a lack of market research, one of the most significant obstacles is poor financial planning. By neglecting to create a budgeting plan to access the money to fund their business, countless Amazon sellers set themselves up for failure.
Fortunately, you don't need to follow in their footsteps. By taking the initiative to properly finance your Amazon business, you can significantly boost your chances of success. Let’s take a look at how to do just that:
Key takeaways
- There are numerous financing options available to Amazon sellers, from automated lending options to government-funded small business loans.
- Amazon has its own lending program called Amazon Lending, whose products include lines of credit, merchant cash advances, and term loans (often through third-party partners).
- If online lending platforms don't meet your needs, you can opt to take out a personal loan that is more closely tailored to your goals.
Top Financing Options for Amazon Sellers
This isn’t an extensive list of lenders, but it’s a good place to get you started. Before taking on any funds, ensure you have a plan for them and you’ve done your research into the company you’ll be working with.
Payability
If you're looking to have access to daily working capital, Payability is a reliable option. With fast and easy approval, Payability offers an intuitive method for any Amazon seller to finance their business. Sellers who use this service can enjoy up to 80% of the previous day's sales in their account.
Terms:
- Minimum 3 months sales of over $10,000 to qualify,
- Must be selling more than $5,000 each month,
- Must have good performance metrics.
| Pros | Cons |
| Eligibility is based on Amazon performance, not credit history | Relatively high cost of financing. |
| No fixed fees, origination fees, or prepayment fees | |
| Costs decrease as your business grows |
Overall, Payability is a good choice for established sellers who are looking to further support the growth of their business. However, if you're still in the early stages of selling on Amazon, you might not meet the qualifications.
SBA Microloan
The U.S. Small Business Administration (SBA) funds small loans known as microloans. These loans are intended to finance eligible small businesses and non-profits. Although the maximum amount for a microloan is $50,000, the average loan is about $13,000. SBA microloans can be used for a variety of funding purposes, including working capital, inventory, supplies, and equipment.
Terms:
The terms of a microloan vary from one intermediary lender to the next. However, most lenders require some form of collateral and the personal guarantee of the business owner.
| Pros | Cons |
| Can be used for a wide range of purposes | Cannot be used to pay off existing debt |
| Competitive interest rates and low fees | Loans cannot exceed $50,000 |
| Extended repayment terms | Slow funding timeline |
| Flexible eligibility requirements |
You may benefit from SBA microloans if you're looking for a more flexible option to finance your Amazon business. However, if you need a higher amount of working capital and need it in a hurry, these loans may not fit your timeline.
Amazon Lending
As its name implies, Amazon Lending is a loan program run by Amazon and a select number of third-party partners. It provides sellers with business lines of credit, merchant cash advances, and term loans to help expand their online businesses and support the costs of selling on Amazon. This program is invite-only, meaning it's exclusively available to Amazon sellers.
Terms:
- Must be an established Amazon seller to qualify
- Can borrow between $10,000 and $10,000,000 with terms up to 2 years long
- Loan decisions are provided within 5 business days
| Pros | Cons |
| Easy online application process | Repayments come out of your business checking account, potentially increasing risk of overdraft |
| May favor small businesses more than most major financial institutions | Very minimal information is available about Amazon Lending, so it’s unclear how competitive its rates and terms are |
Amazon Lending may be a good fit for sellers who are looking for a quick, convenient application process. That said, ensure you are crystal clear on the terms and conditions before signing up for this program.
Fintech Lenders
As an alternative to Amazon Lending products, there are numerous Fintech lenders that can help provide the financing you need. Here are some trusted options for Amazon sellers who are looking to expand their business:
8fig
8fig is a financing option exclusively available to eCommerce business owners. Its intuitive interface and advanced tools help create a seamless experience. 8fig is also known for providing flexible funding options, making it a reliable platform for Amazon sellers of all kinds.
Terms:
- Must be selling on Amazon for at least 12 months
- Must have an annual revenue of $100,000 or more
- Must have an average monthly revenue of $8,000 for the last 3 months
| Pros | Cons |
| Flexible and adjustable terms | High threshold to qualify |
| Fast approval process | |
| Available capital grows with your business | |
| No collateral or personal guarantee required |
Although 8fig requires a steep annual income, it can be a promising option for sellers who already enjoy steady success on Amazon. This platform can help give you the boost you need to grow your business further.
Viably
Viably provides a wide range of options to sellers who are looking to expand their business. Viably Cash Advance offers a daily cash payout of up to 80% of daily sales, while Viably Growth Capital offers up to $1 million for more established sellers to use toward various expenses.
Terms:
- Must have at least 6 months of sales history to qualify for Cash Advance,
- Must have $5,000 monthly average sales to qualify for Cash Advance,
- Must have 6 months or more of sales history to qualify for Growth Capital,
- Must have $10,000 monthly average sales to qualify for Growth Capital.
| Pros | Cons |
| No impact on your credit score | No automation for accounts payable |
| Seamless customer experience | |
| Minimal setup required |
Out of all the financing platforms for eCommerce business owners, Viably is one of the most intuitive to use. Whether you prefer their Cash Advance or Growth Capital plan, you can easily find a solution that meets your needs.
SellersFi
Formerly known as SellersFunding, SellersFi is a platform that provides easily accessible funding to eCommerce sellers in a variety of funding options. It has a product match feature to help connect you to a solution that suits your goals, and flexible funding and terms depending on your business needs. The platform can also analyze your company data and provide insights to help improve profitability.
Terms:
- Must have at least 6 months of sales history on an eCommerce platform
- Must have more than $20,000 in monthly net sales
- Seller's entity must be incorporated in the United States, Australia, Canada, or the United Kingdom as an Ltd., LLC, or Corporation
| Pros | Cons |
| Excellent customer service | Extended due diligence process for larger loan sizes |
| Flexible terms and conditions | |
| Competitive rates |
SellersFi positions itself as a comprehensive financial solution focused on being a partner rather than simply an Amazon seller loans lender. While this might be beneficial for fledgling businesses, smaller start-ups could find the suit of features and options overwhelming.
Personal Loans
Personal loans are unsecured loans that require fixed payments with interest. They can be used for various personal needs, from paying for inventory to financing an office. Since there is no collateral requirement for personal loans, lenders will instead consider your credit history, income, and debt to determine your eligibility.
Terms:
The terms of a personal loan vary from one lender to the next. However, it's important to ensure that you have a strong credit score and a low debt-to-income ratio to increase your chances of getting approved.
| Pros | Cons |
| Minimal restrictions on loan uses | High credit and income requirements |
| Predictable payments | No continual borrowing |
| Fast funding | Increase in debt load |
| No required collateral | |
| Spread out large expenses |
If you need funds quickly to grow your Amazon business, personal loans may be a good option. These loans are also ideal for sellers who prefer to make payments on a predictable schedule.
What Type of Lending is Right for You?
When comparing loans, it's important to remember that no loan is a one-size-fits-all option. You should always consider your income, debt, and business goals when determining which lending type is right for you. For example, if you're an established seller looking to grow your business further, you may benefit from a platform like 8fig or Payability.
Alternatively, if you need extra assistance obtaining working capital, SBA microloans or Amazon Lending are programs designed with your needs in mind. Regardless of which loan type you choose, always take the time to read the terms and conditions so you understand what you're agreeing to.
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What Should You Do If You Are Just Starting Out?
If you're just starting to establish yourself as an Amazon seller, finding a lending option that meets your needs can be tough, especially considering many lenders favor high Amazon sales volumes in order to quality. With that in mind, Trellis is here to help. Our simple, intuitive platform is designed to help eCommerce sellers find their footing and set their businesses up for success with comprehensive marketing solutions. Learn more about how we can help you thrive on Amazon.