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5 Reasons Why the Amazon Lending Program is Better than the Traditional Business Loan

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Amazon lending

The cost of starting and running an Amazon business is incredibly high. As a result, some small business owners need more money to buy inventory, increase brand awareness and take their businesses to new heights. Additionally, financial institutions are reluctant to lend to companies in their early stages of growth because of the lack of physical collateral.

Amazon lending is a better alternative to traditional business loans. The giant retailer lends to its resellers to help them switch to a bigger manufacturer, purchase additional inventory or advertise. Therefore, the program is designed to help Amazon resellers scale their business and offer higher-quality products.

The following are additional reasons why an Amazon loan can help expand your operation.

1.          No Credit Score

Lenders avoid entrepreneurs with poor credit scores. Banks and other financial institutions will decline your loan application or offer you very high-interest loans when your credit score is low. On the other hand, Amazon doesn’t rely on credit scores when determining the funds to lend to you. That means as long as you meet the following criteria, then you will qualify for a loan. These include:

  • An active seller account registered in an eligible state or country
  • Consistent sales and several positive reviews, and no serious negative reviews in the last year
  • At least $10,000 in sales in the past 12 months
  • No trademark infringement, copyright claims, or similar complaints in the last 6 months
  • Listings that comply with the retailer’s listing style guide

2.          Hassle-Free Application Process

The process of submitting a business loan application is time-consuming and tedious. You have to fill out an application and provide the necessary documentation. It’s easy to apply for Amazon Lending Program if you meet the requirement. The digitalized invite-only initiative begins by confirming your eligibility, clicking on the invite, and waiting for the retailer to approve your loan.

The retailer approves loans based on the performance of the reseller’s account, not on the credit score, tax returns, or financial profile.

3.          Low-Interest Rates

Lenders charge exorbitantly high-interest rates on short-term loans and cash advances. However, Amazon has a reasonable interest rate because the retailer wants to make long-lasting impacts on small businesses. So as long as you have a good strategy, you can maximize your loan and generate more revenue from this platform. The strategic approach will also help you make consistent monthly repayments attached to the Amazon lending program.

4.          Fewer Fees

Usually, business and personal loans have several known and hidden fees or charges. Some of the common fees include:

  • Loan application fees
  • Loan origination fees
  • Prepayment penalties
  • Late payment fees
  • Annual fees

These fees and penalties can hurt a growing business and increase the loan a small business must pay. Thankfully, an Amazon loan does have such fees, and its resellers don’t incur additional fees when they repay their loan early.

5.          Flexibility

Amazon’s line of credit is flexible, unlike other financing options. You can utilize the funds when necessary. Additionally, you can use the loan to meet staffing needs, increase inventory, brand awareness, and product development.

Conclusion

Sellers who need additional money to scale their operations have a great option. Amazon Lending Program is a better alternative to traditional small business loans as long as you have a concrete plan.

The 5 reasons mentioned above will help you evaluate whether Amazon’s line of credit is an excellent option. As a reseller, you can use the funds to meet Amazon-related purposes to grow your business.

I'm a passionate full-time blogger. I love writing about startups, how they can access key resources, avoid legal mistakes, respond to questions from angel investors as well as the reality check for startups. Continue reading my articles for more insight.

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