amazon seller financing
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It’s no secret that retail stores were on the ropes for much of the past decade, even before the COVID-19 pandemic struck. But the pandemic may have hastened the inevitable: that online shopping would come to dominate world commerce.

Front and center in this shift, of course, is Amazon. The online giant’s share of the ecommerce market in the United States reached 49% in 2018, which translates to 5% of all retail sales in the country. Fulfillment by Amazon (FBA) gives sellers a 30 to 50% increase in sales. FBA allows businesses to send their inventory to Amazon’s fulfillment centers where Amazon handles sorting, packing, shipping, customer service and returns. This sort of return on investment leaves many small businesses asking, “How do I get funding to sell more on Amazon?”

It’s hardly a surprise that many small businesses that sell through Amazon eventually look to increase their product line, which typically requires expanding their operations. A major obstacle to expansion and increased sales, however, is working capital. In the world of Amazon seller financing, acquiring that capital can be tricky, especially when trying to go through traditional routes like banks. This can be especially true for small businesses that have recently entered the Amazon marketplace or have little credit history. But, fortunately, financing for Amazon sellers is still available through other avenues, including online lenders.

What is an FBA Loan?

Fulfillment by Amazon (FBA) is the typical business model that a lot of online sellers choose when working through Amazon. Because of this, Amazon seller loans are commonly known as Amazon FBA loans. These loans are offered by Amazon only to sellers who meet specific criteria to qualify. They are designed to help sellers build their inventory and to expand their businesses. The specifics of Amazon seller – or FBA – loans are outlined below under Amazon Lending.

What Percentage Does Amazon Take From Sellers?

Before jumping into selling an Amazon, it’s only natural for small business owners to wonder how much of a cut Amazon takes from each sale. The standard fee charged by Amazon, which is called a referral fee, is typically 15% or less. This fee is not charged up front. Instead, it’s taken out of the Amazon account of the business after the sale is made.

Referral fees vary per sale and according to different types of product. For a detailed breakdown of fees by product lines, read more on

Where Can Amazon Sellers Get Small Business Financing?

Financing for Amazon businesses is available through a variety of sources, including Amazon itself. What methods of short-term financing do Amazon sellers use? The easy answer is whatever method that will allow them to get approved for the funds they need. As shown below, these methods may or may not be unique to Amazon.

1. Small Business Administration (SBA) Microloan

This popular loan is not limited to Amazon sellers. The SBA microloan program is open to all small businesses to help them get started and to expand their operations. Microloans can also be a good fit for business owners with limited credit or lower credit scores, and for potential business owners with limited or no business experience. The loans are funded through SBA-approved lenders.

Qualified small business applicants can receive a loan of up to $50,000. The minimum microloan loan amount is $500, with the average loan amount being $13,000. The maximum term of an SBA microloan is six years, with the annual rate of payment (APR) ranging from eight to 13%. Actual terms and rates are determined by the lender, and the approval process can take several weeks or months.

To qualify, applicants must be a for-profit business with no bankruptcies or foreclosures within the last two years. Funds can be used for working capital, machinery, inventory or any other necessary supplies.

Applicants must also provide a written business plan, financial statements and all necessary business licenses and permits. Depending on the lender, collateral may be required. Applications can be submitted through approved lenders in the SBA microloan program.

It’s important to note that SBA microloan funds can’t be used to pay off existing debts or to buy real estate.

2. Amazon Lending

Many small businesses contemplating entering into a partnership with Amazon naturally ask, “Does Amazon lend money to businesses?” The answer is yes, and Amazon Lending is one of the vehicles.

In this novel approach to Amazon merchant financing, Amazon invites select small and medium-sized businesses – typically growing Amazon businesses with a steadily increasing sales — to participate in this program to help them grow. The businesses that qualify – and subsequently approved — for the program can choose between several short-term financing options. Small businesses that haven’t been in business that long, or that don’t have enough revenue, can find it difficult to qualify for Amazon Lending. Nevertheless, this is usually what online sellers are thinking of when they start looking for an ‘Amazon loan’.

Amazon sellers can see if they’re eligible for a loan in their Seller Central dashboard. To be eligible, a seller must:

  • Be an active Amazon seller;
  • Be an account in good standing with good customer metrics;
  • Have a consistent increase in sales.

The minimum loan amount for this FBA small business loan is $1,000, with a maximum of $750,000. The loans can range between three months to one year with fixed monthly payments. Amazon doesn’t disclose the interest rates it charges for Amazon lending, but they can vary depending on the strength of the business. There are reports of Amazon merchants being charged anywhere from three% to 17%.

There are no credit checks in Amazon Lending and approval can be fast. Approval normally comes in five days, but it has also been known to come on the same day the application is submitted. In addition, the better the metrics and history of the Amazon seller, the more favorable the terms of the loan can be.

On the downside, the short-term nature of Amazon Lending means the monthly payments most likely will be high. The monthly payment is fixed, so businesses pay the same amount every month regardless of sales. This creates the possibility that the Amazon seller could have trouble paying off the loan.

3. Business Term Loan For Amazon Sellers

Business term loans can be funded by traditional lenders like banks or credit unions, or they can be funded by fintech companies or other alternative lenders. These loans are fixtures in the world of small business financing and aren’t unique to Amazon. They provide a lump sum of capital that’s paid to a merchant upfront. This capital is then repaid with regular payments at a fixed interest rate. This is also known as an amortizing loan because the payments are fixed and the principal and interest are paid down over the entire life (or term) of the loan.

Bank loans are a popular financing solution for many kinds of small businesses, not just Amazon sellers. But the qualifications for a bank loan will often be stricter, and may have more strings attached, than if you go to an alternative loan provider.

The amounts of the loan can range from $5,000 to $5 million, with repayment terms set at anywhere from five to 20 years. The amounts loan vary based on the Amazon business revenue of the small business in addition to its credit history. Large and more established Amazon merchants are more likely to qualify.

4. Fintech Lenders

Fintech lending is a relatively new form of financing that uses the latest financial technologies to streamline the lending process. As e-commerce continues to become increasingly more prominent, loans from traditional lenders such as banks or credit unions remain tougher to secure for many merchants.

Fintech lenders, however, give loans or lines of credit to e-commerce businesses, and can provide much needed financing for Amazon stores. These online financing providers are looking for businesses that have good cash flow and are involved in business where financial performance is easily measured – two things that your Amazon sales history should be able to give you with little or no problem.

Approval for a fintech loan can be fast, and so can funding. In some cases, small businesses can receive up to $250,000 within 24 hours. Criteria for eligibility, terms, rates and other details can vary from lender to lender. But in general, financing through a fintech will generally avoid common financing issues that small business owners face, such as mandatory payment schedules or prepayment penalties. This funding option will be

5. Amazon Line of Credit

A more recent version Amazon merchant financing is a business line of credit created specifically for Amazon sellers. This line of credit is a product of Amazon partnering with Goldman Sachs and is a good fit for Amazon business that are experiencing a steady rise in sales. Those growing small business owners who participate can qualify for a credit limit of up to $1 million. The Amazon line of credit is revolving credit that users can pay off as needed. APR can range from 6.99% to 20.99%. There is no annual fee.

Like Amazon Lending, this program is by invitation only. Small business owners who are eligible will see their invitation in their Seller Central dashboard. Once they click on the invitation, they are directed to the Marcus by Goldman Sachs website to verify their eligibility and to complete their application. From that point, Amazon is not part of the underwriting process. Goldman Sachs receives all pertinent data on the business from Amazon, and then underwrites the line of credit for the business based on that data.

The online application process can be completed within minutes, and the decision to approve or not is typically made quickly. The fixed interest rates also make the Amazon Line of Credit attractive to business owners, although late payment fees can be charged.

The Amazon Line of Credit is more flexible than the Amazon seller loan. It offers small business owners the opportunity use funds only when they need them . . . and for a variety of uses, such as staffing, inventory, expansion, product development, equipment or to cover any other manufacturing need.

6. Merchant Credit Card Cash Advance

Since Amazon businesses receive most of their revenue through credit-card purchases, merchant cash advances (MCAs) can help those businesses that are having trouble with cash flow. An Amazon business can take an advance of a given amount in a lump sum based on its credit-card sales. These funds are then paid based on a percentage of its daily or weekly sales. Many retailers are already familiar with this financing option, so it can make sense for them if they’ve started selling through Amazon to continue using MCAs.

Small businesses can normally receive $2,500 to $250,000 through a Merchant Cash Advance, although in some cases larger amounts are possible if the business needs and financial performance qualify for it. Once approved, Amazon businesses can access these funds fairly quickly, sometimes within a few hours. Another attractive benefit of merchant cash advances is that sellers can apply online with less documentation needed than even with most non-traditional lenders. For example, applicants might not need to provide collateral, or be subject to a credit check, if they qualify. As such, merchant cash advances may be a good choice for new businesses and those with low credit scores.

The downside of merchant cash advances is that they come with higher costs of financing than other options. This does mean that payments can be high while the advance is still outstanding. But at the same time the payments can be adjusted to reflect the current performance of the business if an Amazon seller experiences any cash-flow issues.

7. Factoring Loans With Amazon Store Receivables

Factoring loans can be attractive to Amazon sellers, since they are easy to get and don’t require collateral to qualify. The factoring process involves a financing company buying the accounts receivable of an Amazon business. The financing company then keeps a percentage of the accounts in reserve. It also charges a fee for its services.

The reserve is returned to the Amazon business once the receivables are settled. Interest can also be applied at a high rate. In this case, the Amazon business has no control over what interest rate is charged since repayment depends on settling the outstanding receivables. So, while the prospect of receiving needed cash quickly may be appealing, small business owners needs to understand the actual amount they will be obligated to pay back before they consider a factoring loan.

8. Personal Loans

For businesses that have just started and may not have enough of a sales history to qualify for an Amazon business loan, a personal loan may be a good option for Amazon merchant funding. Personal loans are often unsecured loans with no collateral required, but banks, credit unions and fintech lenders offer both secured and unsecured loans. Secured loans normally require collateral.

Personal loans are term loans that can range from $1,000 to $35,000, with the typical length of the loan term being two to seven years. Interest rates are based on the personal credit of the borrower, with those having better credit scores receiving more favorable rates. Eligibility is based on credit scores, debt and income.

Personal loans can be a good option for new small business owners who don’t have any existing debt, but don’t have enough capital to correctly launch an enterprise. Funds are typically available within one business day when approved. The monthly loan payments are the same throughout the term of the loan.

But interest rates can be very high given that they are based on the business owner’s personal credit score and the loan is typically unsecured. The loan is in the name of the business owner, not the business. As a result, small business owners with pre-existing personal debt shouldn’t take out a personal loan to fund their business.

9. Peer-to-Peer Financing (P2P) for Online Stores

A peer-to-peer business loan is directly funded by investors, rather than by a lender or other institution. P2P providers generally act as a mediator between investors and small business owners who seek financing. In this process, business owners describe their business and why they need funding via an online P2P platform and then waits for offers from investors.

At that point, a P2P provider steps in to facilitate the application, underwriting, approval, and payment process for the Amazon small business loan. Potential investors require credit scores, financial records, and a written business plan to be submitted as part of the application process for a P2P loan. The more appealing this information, the more offers and better terms small business owners are likely to receive.

P2P loans are similar in nature to business term loans, but don’t have the same return on investment as business term loans from direct lenders. As a result, they normally come with higher fees. P2P loans are paid back – along with interest and fees – in monthly installments.

Non-Traditional Lenders vs. Banks for Amazon Seller Lending

Small businesses looking for Amazon seller – or Amazon merchant – lending have unique needs that may not apply to other businesses. Fintech lenders, Amazon Lending, Amazon Line of Credit, and other online lenders offer several built-in advantages for those businesses looking for Amazon inventory financing and an Amazon seller business loan. One of those advantages is that non-traditional lenders offer an easier and faster path to approval than banks. In fact, it could take weeks to get approval for financing from a bank.

Traditional banks typically require two years of business history, bank statements and tax documents that new Amazon sellers may not have. It can also be challenging to get smaller loans under $100,000 from a bank.

Approval is based on the online sales history of a business. In addition, non-traditional lenders offer more of a variety of financing options with flexible terms than banks. Not all online lenders consider personal credit scores. As a result, non-traditional lenders are a better fit for e-commerce businesses, and Amazon sellers in particular.

Which Loan is Best for Your Business?

Deciding which loan is best for an Amazon small business depends on the goals and needs of the business. Amazon Lending offers reasonable terms for those Amazon sellers that have been working exclusively in the Amazon Marketplace for at least a year. On the other hand, newcomers to Amazon or those businesses that sell through a variety of ecommerce websites will most likely look for a different type of loan. That loan will most likely be one that isn’t offered through Amazon.

Short-term options can be a good fit for Amazon businesses that need quick approval and funding.

Longer-term loans might be appropriate for businesses looking to expand their operation, or businesses that need to refinance debt. The longest terms and highest loan amounts are offered by term loans and peer-to-peer loans. While collateral may be required, it may also lower the interest rate on the loan.

Typically, the best loan for a business is the one it can afford. But, no matter the loan, a business will need to provide documents such as:

  • Business and personal tax returns;
  • Business and personal bank statements;
  • Financial records;
  • Credit history;
  • Profit and loss statements;
  • A detailed business plan.

While a strong credit history is important, a less-than-stellar one isn’t necessarily a deal breaker. This is especially true when it comes to dealing with online and other non-traditional lenders. Knowing in advance what type of loan is best for the unique needs of a business will save time and help hasten the approval and funding process.

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