written by | March 23, 2022

How to Avail Amazon Seller Loan?

E-commerce culture is growing every day at an unbelievable pace, and it's playing a great role in shaping the economy of India. Besides being a great shopping solution, Amazon has been supporting small-scale businesses and helping them through the initial phase of their growth journey. Amazon isn't the only e-commerce giant operating in India. But you enjoy a greater customer base and wide geographical reach. Now, the feasible credit solution from Amazon has increased amenities for its sellers. If you're an Amazon seller facing a financial crisis but want to focus more on your sales, Amazon loans can help you. 

Did you know?

Amazon is in a flurry by investing in the fintech industry. With an eye on the international market, Amazon has taken excellent bets to support its domination in the retail market. For instance, India and Mexico are two countries where there have been investments from Amazon in significant amounts to create greater engagement on its platform.

What’s the Purpose of Amazon Loans?

Amazon is unique in its position in the market for lending to sellers, and the move into banking was long since it was first announced. Based on the current strategy for financial services, what Amazon is currently launching and developing provides us with insight into the company's plans.

Particularly, it appears that they're focusing on pursuing their strategy of increasing their participation within their Amazon ecosystem.

Amazon has made several strategic investments to grow the company's customer and merchant base. Amazon has also launched tools to:

  • Increase traffic to their platform by utilising different credit programs like Amazon Pay Later
  • Let sellers use their platforms to sell more items without hassle.
  • Let more merchants join their platform.

The company makes banking more accessible and easy than ever before. It does this by taking the essential elements of modern banking such as online bill pay, credit cards that do not charge monthly service costs or overdraft charges, personal loans, etc. The company is tweaking these with ways designed to appeal to Amazon buyers and sellers. 

In 2011, Amazon started lending funds to get into the small-scale business sector and assist Amazon sellers in expanding their business with simple financing options. The company also introduced a variety of credit card options for consumers during the same time. 

Also Read: How to get started with Amazon Franchise in India

Advantages of Amazon Loans

Easy business expansion: Amazon knows your needs as an e-commerce seller. It offers you special offerings in the loan. 

Easy-to-avail finance: You're free to apply for the Amazon loan through the lenders portal wherever and whenever you want. You don't have to commute, and you save the time and effort you can now put into your business operation. 

Collateral free: Amazon's most loans are collateral-free, which means the seller (the loan availed) will be stress-free and focus on business vitals instead of worrying about the loan.

Repayment terms: Most loan lenders believe in the EMI repayment system, but Amazon doesn't. It lets its sellers repay the loans with great flexibility. You can pay weekly also, and this flexibility lets you plan your finances much better. Many sellers who've gotten Amazon loans appreciate its flexibility.

Who is Eligible to Apply for Amazon Loan?

We've talked about the basics of what Amazon lending is all about. We'll find out who's eligible for this loan. This program is exclusively for small-sized business owners who sell through an Amazon marketplace. 

If you're wondering what Amazon loan requirements are or who is eligible to lend from Amazon, Amazon hasn't released this information. However, according to Amazon seller forum threads, it is possible to decipher the criteria that determine the acceptance to participate ineligible for the Amazon Lending Program. They include:

  • No trademark or copyright violation claims.
  • Customer satisfaction metrics.
  • You must be selling through Amazon for a minimum of 12 months.
  • The Amazon listing guidelines comply with the platform's guidelines.
  • There have been no serious customer complaints in the past six months.

How Can I Finance My Amazon Business?

If you're thinking of availing a loan, it's crucial to consider your objectives and which type of loan will be most suitable for your needs. Think about the following questions: 

  • Are you interested in running an ad campaign to promote your products through social media platforms? Do you think you can find a great deal on bulk purchases of goods? Are you planning to beef up your inventory and meet the demands of the holidays?
  • After you've understood your needs, conduct an in-depth analysis of your company's finances and the annual cash flow to understand the current situation better. Before diving into the research process, you must think like a loan officer. Here are some loan availing points to think about:
    • Review the credit scores of your clients to know your risk tolerance.
    • Consider how soon you'll need funds.
    • Decide on the amount of time you'll need to repay the money. 

If you're under time pressure and bank loans appear too complicated for you, keep your eyes open because you have other options for quick capital loans. They generally have shorter processing times and easier approvals.

Also, do you have in-depth debit and credit knowledge? What are they and how does it work? It’s crucial to have this knowledge before selling on Amazon and getting into this business. 

Also Read: Guide to Starting a Flipkart Delivery Franchise

What can You Use Amazon Loans for?

Maintaining a Healthy Inventory

Being an Amazon vendor, maintaining your rank is always among the top priorities to gain more sales. You need a wide range of products, and without maintaining a healthy inventory, you can't attract mobs of customers. You can use Amazon loan funds to maintain your inventory. 

Marketing Process

Your marketing approach needs to be deeply planned, practical, smart and most importantly, something different from what your rival sellers are doing. There are roughly 300 million customers on Amazon. To expand your customer base, you need to focus more on your strategies and quality control over anything else as an Amazon seller. 

Consolidation of Debt

You can enjoy a bigger profit margin by keeping all your debts in place. Thankfully, Amazon loans help you maintain your existing debt. 

Smooth Cash-Flow

If you are running a daily business, you already know the diversity of costs. Your money flow needs to be very smooth to meet all costs, and monitoring all these costs helps you improve your business' cash flow. 

Advantages of Amazon Loans

  • To start with, you enjoy a limit of ₹1.5 lakhs.
  • The interest rate begins at an incredible 1% per month.
  • Up to 36 months tenure of repayment. 
  • 100% paperless process. Once you upload your documents, the rest process consumes 48 hours only.
  • No hidden charges.
  • Loans are 100% unsecured, which means no security is needed.

Documents Required for Amazon Seller to Avail Loan

  • PAN Card
  • Current account's bank statement for the past 12 months
  • Business address proof
  • State-Issued ID Proof
  • 1-year bank transaction statements of the POS machine 
  • Documents comprising details of all your existing loans
  • Order Copy
  • Financial documents for the previous 24 months – Balance Sheet, Computation Sheet and Tax Returns
  • Statutory documents of the business
  • Proof of Annual Sales
  • KYC documents

Conclusion

Before deciding on what kind of loan you'll need to fund your Amazon business, think about what you intend to do with your funds and how quickly you require the funds.

Think about how much you'll need and how long it will take to repay the Amazon loan. Having the cash flow required to reach these goals can simplify running your small-scale company. 

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FAQs

Q: Is Amazon Lending accessible to every Amazon merchant?

Ans:

While Amazon Lending is only accessible to Amazon sellers, various factors determine the program's acceptance. It is an invite-only program, and you can only use their funding when they allow you the opportunity to do so.

Q: Who should avail of Amazon seller loans?

Ans:

Amazon Lending is the perfect alternative for entrepreneurs who want to grow their businesses. In contrast to other lenders/banks, Amazon doesn’t need all vital documents like annual income statements, bank statements, or tax returns. Amazon does not even check on your credit scores.

Q: How will I receive the Amazon loan funds?

Ans:

Amazon will send these funds directly to sellers via its seller Central Account.

Q: Who can get an Amazon seller loan?

Ans:

Everybody from small-scale to big businesses will be able to avail of Amazon seller loans. Each seller's experience will vary because Amazon doesn't give crystal clear information about the eligibility criteria. We've already mentioned above the eligibility criteria.

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