Amazon FBA loan

To run an Amazon business profitably, you’re going to need capital. You’ll need enough money to cover your costs: purchasing inventory, paying fees, and hiring people, if necessary. As sales increase, so do the costs to keep inventory in stock. But how do you continue to increase inventory purchases and scale your business when you’re making just enough cash to live?! In this article we discuss how to get an FBA Loan for your Amazon business. Turns out, there are several Amazon seller loan options currently on the market!

If you don’t currently have the working capital to finance the expansion of your operations, there is good news.  Many options are now available for Amazon sellers to obtain rapid funding for their FBA business.

As e-commerce continues to surge in 2021, Amazon and other e-commerce lending platforms are more legitimatized in the e-commerce finance sector.  This is great news in terms of the availability of funding for a previously under recognized commerce domain.

Deciding when and how to secure an FBA loan for your business is a major decision.  This step is often the first-time newer entrepreneurs take on additional debt.  That said, waiting too long to seek financing can leave your business stalled and you may miss out on growth opportunities.

Need an Amazon FBA Business Loan?  Here are Six Amazon Business Funding Options

Funding Options for Amazon FBA Business Financing include the following:

  1. Fintech Growth Funding
  2. SBA Microloan
  3. Amazon Lending
  4. Amazon Line of Credit
  5. Personal Loans
  6. Business Credit Cards

Regardless of the loan route you select, it’s important to think through how and when you’ll use the funds before you begin the application process.   Let’s go through each funding option available for Amazon FBA sellers and FBA Global’s recommended route for FBA loans.

1.  Fintech E-Commerce Funding

We start our review with Fintech E-Commerce funding because it’s the most recent and most Amazon FBA business tailored option on the market.  Since more traditional funding sources often shy away from e-commerce, an entire finance sector has developed to fill the gap.  These specific lenders provide FBA loans as growth capital to e-commerce sellers and will typically work with more early-stage businesses than banks.  Because these lenders are funding solely e-commerce businesses, they are more aware of the development stages of an Amazon FBA business and know where the funds would be best used.  See below for examples.

AccrueMe

A revolutionary funder, this company offers growth capital specifically to Amazon sellers with NO monthly payments, personal guarantees or equity guarantees.

  • AccrueMe doesn’t charge interest for its investment nor is a credit check required.
  • These funds are 100% based on your direct sales on Amazon.
  • AccrueMe has $100m to invest that is dedicated strictly to Amazon FBA sellers.

AccrueMe is a newer funding organization established in 2019.  Its site states that it will invest as low as $5,000 and as much as $5m in Amazon businesses it deems profitable.

AccrueMe’s enrollment process is straight-forward.  It requires you to sync your Seller Central with their API so they can determine the potential of your business. 

Once funded, the service offers a user dashboard where additional funding requests and paydowns can be made.

Click here to check out AccrueMe.

Sellers Funding

Sellers Funding is an e-commerce merchant funding program that provides working capital solutions to help online merchants run successful businesses. This program offers the following services.

  • Term loans, revenue advance, and credit line funds that are deposited into your account in 1-2 business days
  • Approval depends on your sales performance
  • Must have at least six months of sales history on Amazon and selling at least $5,000 per month
  • A personal credit check is completed

The application takes only a few minutes, but you’ll need to identify and outline your plan to grow your business.   SellersFunding offers a 90-day grace period before you start paying back your loan. If you’re approved, the funds can be available in 1-2 days.  After paying back 50% of your outstanding balance, you’re eligible for a new loan. There are two different ways to finance your business on Amazon: seller credit and seller financing.

SellersFunding interest rates range 14.99-24% APR, with no hidden fees or pre-payment penalty.  It requires personal guarantees rather than collateral, and, while it does look at credit, there’s no minimum score required. Rather, in combination with other factors, SellersFunding assesses the overall health of your business.

Click here to check out Sellers Funding.

Pros

  • Working with companies dedicated to e-commerce
  • Fast approval & fast funding offers
  • More lax payback terms

Cons

  • These lenders typically connect to your Amazon Seller Account so they have insight into your business (doesn’t have to be negative)

Who should consider Fintech Amazon funding?

Fintech funding is best suited for early Amazon sellers who know how to make a profit but don’t currently have the access to capital that can help them scale quickly.  These e-commerce tailored lenders provide access to capital in a matter of days, which allows for a business to grow quickly.

2. SBA Microloans

SBA Microloans are offered through the U.S. Small Business Administration (SBA) and present another viable option for FBA businesses. This program offers loans from $1,000 to $50,000 with a small amount of required collateral.

SBA Loan Terms

  • Minimum Loan Amount: $500
  • Maximum Loan Amount: $50k
  • Maximum term of Repayment: 6 years (72 months)
  • Interest Rate: 8 – 13% APR (annual payment rate)

Note: these will depend on the lender you choose.

Eligibility:

  • Must be for-profit business
  • Cannot have bankruptcies or foreclosures in last two years

Pros:

  • Can quickly receive up to $50,000 (average microloan is $13,000
  • Typically requires no minimum personal credit score
  • Some lenders offer business mentoring programs 

Cons:

  • Cannot use money to pay off other debts
  • Application process can take several weeks
  • Must have a written business plan
  • Often, a collateral or personal guarantee is required

Who should consider SBA Funding?

Small businesses, start-ups, and entrepreneurs with limited credit and financial records will benefit the most from SBA funding. For business owners with lower-than -average credit, SBA funding may be the best loan option.

Click here to check out microloan programs.

3.  Amazon Lending

What is it?

Amazon has recently started offering Amazon FBA sellers a new type of financial tool: the Amazon Lending program. This program offers new FBA sellers extra cash to accommodate the increasing costs of running a small online store. 

Amazon Lending is an invitation-only program.  Amazon selects the sellers (according to sales history) that it thinks will be the best fit for an Amazon Lending loan. That means that even if you really want a loan and have good sales history, you can’t apply for Amazon Lending unless Amazon has invited you.

The downside of Amazon Lending is that it might make you too indebted to Amazon. You’re already selling on its platform, using its marketing tools and perhaps using its fulfillment services to package and ship your products to buyers.

Pros:

  • No credit checks (they may review personal business history)
  • Takes only five days, on average, for approval; some sellers have been approved in minutes
  • Funds are disbursed directly into your seller account balance
  • No origination fees, application fees or prepayment penalty
    Funding amount and terms are based on your metrics and credit history

Cons

  • Invitation Only
  • Payments taken directly out of Seller Account balance
    • Can result in low payouts
  • Higher monthly payments as these loans are intended to be short term
  • If sales drop, there is risk you wouldn’t be able to repay

Who should consider Amazon Lending?

The Amazon Lending program is best suited to Amazon sellers that have solid revenue and growth projections and therefore, will be able to make the monthly payments.  Also, since this program is by invitation only, it’s likely that if you’re selected, you’ll be able to meet the requirements and handle the monthly payments. 

Click here to look into the Amazon Lending program.

4. Amazon Line of Credit

What is it?

Amazon has recently partnered with Goldman Sachs to provide qualified sellers with a “Business Line of Credit” built specifically for Amazon sellers. This is different from an Amazon Lending loan.  The line of credit provides Amazon sellers with the flexibility to request funds when the need arises, instead of taking one large lump sum.

Terms

  • Credit Maximum:  $1 Million
  • Length of Credit:  Revolving credit; draw and pay down as needed
  • Interest Rates: Range from 6% to 21% APR

Note: This program is invitation only at this point with minimal information on the requirements

Pros

  • More flexible than Amazon Lending
  • Lines of credit can go up to $1m
  • Application process is automated

Cons

  • Higher interest rates
  • Maintenance fee on the account if a certain threshold isn’t used
  • Late-payment fees

Who should consider Amazon Lines of Credit?

Amazon lines of credit through Goldman Sachs are best for businesses with higher consistent sales.  The line of credit can increase but that would be accompanied by higher interest rates so it’s advisable that your loads be paid down quickly.  This is best for sellers with sufficient cash in-flow.

Click here to find out if you qualify for the Amazon Line of Credit through Goldman Sachs.

5. Personal Loans

One of the early ways to get funding as an Amazon seller is through a personal loan.  You can receive between $2,000 and $50,000 depending on where you apply.  Annual interest rates can vary widely but are typically between 5% – 25%.

Personal loans typically have a longer payment schedule, from 2 to 5 years and have monthly installments usually beginning within 90 days of the money being lent. 

6. Business Credit Cards

Though another funding option is to open business credit cards and spend as needed, interest rates on credit cards are quite high.  If you’re confident you can pay your credit card balance each month, then using a business credit card is a quick way to fund your Amazon FBA business.  This loan type is recommended for smaller amounts of money over a long period of time since there’s a lower credit limit on most early business accounts.

What Is the Right FBA Loan Option for your Amazon Business?

There are many options, as listed above, for you to consider if your Amazon business would benefit from cash infusion through a loan.  Working with a lender that doesn’t have a set payment schedule is a good option for many Amazon sellers, especially newer sellers.  As the payment turnaround in an Amazon business can be much slower than expected, having the peace of mind of not having to make immediate payments will greatly benefit your business and state of mind in the long run. For this reason, I recommend Fintech funding with AccrueMe as a solid lender. 

With AccrueMe, you can start to use the immediate funding without monthly payments or personal guarantee.  Not only this, but AccrueMe doesn’t take a permanent equity stake in your business.

Sound too good to be true?  Remember, AccrueMe will hold a profit share in your business for as long as the debt is outstanding so you are still giving up a piece of your income.

fba loan - funding for Amazon sellers through AccrueMe

Conclusion

Before deciding on the type of FBA loan to pursue for your Amazon business, first, it’s important to have a solid business plan that outlines what you’ll use the money for and how soon you need the money. Having the working capital you need to achieve your business objectives will make it that much easier to run your small business successfully.

If you need funding, consider which loan option will provide you the right amount of funding with the desired payback terms based on your estimate of use.  As always, the separation is in the preparation so come with a plan and leave with a thriving business.

Feel free to reach out to FBA Global directly if you have questions on how best to obtain an Amazon FBA loan.

If you’re looking for more free Amazon FBA resources, check out our Guide to Selling and Building an Amazon Brand.


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