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Business loans for Amazon sellers

Restock inventory, market your brand and more with financing fit for your online business.

Amazon Lending isn't the only source of financing for e-commerce sellers that use the platform. While it's can be a great option for some sellers, you can only apply if you've been invited. Even if you've received an Amazon Lending invitation, consider all of your options first to make sure it's the right choice for your store.

7 financing options for Amazon sellers

Traditional business loans don't always meet the needs of Amazon sellers. These financing alternatives may be more friendly to e-commerce businesses.

  1. Amazon lending
  2. Inventory financing
  3. Business lines of credit
  4. Short-term business loan
  5. Merchant cash advance
  6. Peer-to-peer business loan
  7. Personal loan

1. Amazon Lending

Amazon Lending offers financing to sellers through a few different programs:

  • Amazon directly funds short-term business loans from $1,000 to $750,000 with terms as long as 12 months. While it doesn't advertise rates on its website, former borrowers cite rates of 6% to 16%.
  • The platform also partners with Marcus by Goldman Sachs to offer lines of credit with limits from $10,000 to $75,000 and rates from 6.99% to 20.99% APR.
  • Amazon Community Lending is a pilot program that offers low-cost term loans with nonprofit lender Lendistry. These run from $10,000 to $100,000 at a 8% to 9.9% APR with terms as long as two years.

You have to receive an offer from Amazon to apply for any of these programs. You can check your offers by logging on to Amazon Seller Central — you should receive a message from Amazon Lending if you qualify for any of these programs. Typically, Amazon sends offers to businesses that have used Amazon for at least one year and have consistent sales.

A major downside of Amazon Lending is that your funds are earmarked for Amazon alone. If you need capital to diversify your online store outside of the marketplace, you’ll have to look elsewhere.

Read our review of Amazon Lending

2. Inventory financing

Some lenders offer short-term loans backed by the inventory you're purchasing. Typically you can borrow about 80% of the value of the inventory you're buying. Often, inventory financing providers can send the funds directly to your supplier — and in some cases, you can finance your inventory before it's manufactured.

E-commerce inventory loan providers like Kickfurther are often more streamlined than your inventory financing provider. Rather than asking for paperwork, online inventory lenders connect with your Amazon seller account to underwrite the loan.

3. Business lines of credit

Business lines of credit are designed to cover recurring expenses like stocking up on inventory. Much like a credit card, these give you access to a revolving credit line for purchases or cash withdrawals whenever you need it. Many online lenders offers smaller lines of credit with fast applications with e-commerce sellers in mind.

Use this money for almost any purpose — unlike Amazon lending, it’s not limited to your online inventory. Available in credit limits from $5,000 all the way up to $500,000, a credit line can be a handy tool to pay for marketing services or hire seasonal help to fulfill your orders. Most providers charge an annual fee along with interest on the funds you withdraw.

4. Short-term business loans

For one-time expenses, short-term business loans could be a better option than a credit line. While term loans from banks are difficult for e-commerce sellers to qualify for, short-term loans from an online lender have more flexible credit and revenue requirements. And they offer loan amounts that better meet the needs of Amazon sellers, usually from $5,000 to $500,000.

Most charge interest plus fees, which you pay back in fixed monthly repayments — usually over three to 28 months. The main drawback is that rates can get high, especially if you only have a small online store. Rates over 60% APR are common for this type of financing.

5. Merchant cash advances

Because Amazon businesses bring in the majority of their revenue through credit card sales, a merchant cash advance could help if you’re having cashflow issues. Essentially, you borrow a lump sum based on your credit card sales and repay it along with a fixed fee and a percentage of your daily or weekly sales. Since it's an advance on future sales, your credit score doesn't factor into the application.

You can often borrow from $2,500 to $250,000 and get funds in just a couple of days. But this is the most expensive type of financing available to small business lenders and rates sometimes top 300% APR. And it can be difficult to meet the repayment schedule if your business makes only a couple of large sales a month.

6. Peer-to-peer business loans

A peer-to-peer (P2P) business loan is similar to a business term loan, except it’s funded by investors, rather than a direct lender. Some small business owners prefer this option because it's easier to qualify for than a bank loan.

P2P platforms usually act as the middlemen between borrowers and investors. They oversee the application process, underwriting and repayment, but they don’t actually fund your loan.

You pay back these loans with interest and fees in monthly installments that can be expensive. Because P2P platforms don’t have the same return on investment as direct lenders, they typically charge higher origination fees.

7. Personal loans

Personal loans are good for online merchants who are just getting started on Amazon or other selling platforms. Many lenders allow you to use a personal loan for business expenses.

Personal loans typically range from $2,000 to $50,000, which can be useful if you’re looking to buy inventory or hire marketing professionals. This type of financing relies on your personal income and assets rather than your business's.

APRs generally range from 5% to 36% APR — sometimes including an origination fee of 0% to 5%. And like business term loans, you’re charged interest and fees that you pay back in monthly installments over two to seven years.

Compare a variety of business loans for Amazon sellers

These online providers may be a better option for Amazon sellers than a traditional bank loan. Compare personalized results by filling out the form with information about yourself and your Amazon store.

Name Product Filter Values Loan amount APR Requirements

Lendio business loans
Finder Rating: 4.75 / 5: ★★★★★

Lendio business loans
$500 – $5,000,000
Starting at 6%
Operate business in US or Canada, have a business bank account, 560+ personal credit score
Submit one simple application to potentially get offers from a network of over 300 legit business lenders.

Kickfurther inventory financing
Finder Rating: 3.9 / 5: ★★★★★

Kickfurther inventory financing
Up to $2 million
Not applicable
Varies
Get a crowdfunded loan for your e-commerce inventory.

National Funding business loans
Finder Rating: 4.65 / 5: ★★★★★

National Funding business loans
$5,000 – $500,000
Not stated
In business 6+ months and make at least $150,000 in annual sales. Other loan types have additional requirements.
Working capital loans and equipment financing, some high-risk industries may be eligible.

Fundbox lines of credit
Finder Rating: 4.2 / 5: ★★★★★

Fundbox lines of credit
$1,000 – $150,000
Not stated
6 + months in business, $100,000+ in annual revenue, 600+ credit score
Get flat rate, short-term financing based on the financial health of your business, not your credit score.
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Compare up to 4 providers

How to decide which loan offer is best for my business

The best loan offer is the one your business can afford. Generally, if you’re operating solely through the Amazon Marketplace and have been around for at least a year, Amazon Lending offers solid terms for its sellers. However, if you’re new to the Amazon scene or want to diversify your income with other e-commerce websites, you may want to consider a different type of loan.

Choose a short-term option like a merchant cash advance if you need fast turnaround. Purchasing inventory or paying for marketing are generally simple expenses that can be paid off quickly.

A loan for a longer term might be ideal if you’re looking to expand beyond Amazon or you need to refinance large debts. Term loans and peer-to-peer loans tend to offer the longest terms and highest available loan amounts. Some may require you to put up collateral, which can lower your interest rate but puts your business at risk if you default.

What common business expenses can I cover with financing?

E-commerce businesses take on expenses that can differ from those of a traditional brick-and-mortar storefront. A lot of your revenue goes toward marketing, inventory and fulfillment for your online business. And when you’re working through the Amazon Marketplace, you’ll also pay fees for using Amazon’s services.

  • Marketing. Eager to get more customers through Amazon? Dedicating a portion of your budget to website design, Facebook marketing and email blasts can be helpful ways to attract more business.
  • Inventory. When you’re selling goods on Amazon and other e-commerce sites, restocking inventory can be the bulk of your expenses.
  • FBA costs. If your orders are processed through Fulfillment by Amazon, you’ll need to account for storage and shipping costs on top of Amazon’s usual fees.
  • Selling plan fee. Amazon sellers pay $40 a month as a professional selling plan fee. Nearly $500 over the course of a year can be pricey if you’re just starting out. A small line of credit or personal loan can cover it while you build your business.
  • Referral fees. Amazon charges variable referral fees for items in different categories. If you need extra capital before the rest of your current inventory has sold, a small loan may help cover related costs.

What will I need to apply?

No matter the loan you’re applying for, you’ll need to provide basic documentation that includes:

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

Lenders will check your credit history for any past defaults or bankruptcies when reviewing your application, but a few imperfect areas won’t necessarily exclude you from approval. Focus on what you control, like creating a top-notch business plan, to make up for it.

What challenges might I face getting financing as an Amazon seller?

You might find it hard to get financing to start or build out your business through traditional lenders. With so many online businesses on the smaller side, banks often shy away from offering financing unless you have a proven track record.

Many nontraditional lenders are willing to extend loans to Amazon sellers, although you may still face hurdles when applying. If you don’t have enough revenue or haven’t been in business long enough, you may not qualify for Amazon Lending or similar loans.

In that case, look for loans designed for startups and small businesses. These loans can help build your initial capital when you don’t have much experience or brand power. Once you start gaining traction, you can develop a more detailed business plan with a financial adviser to show lenders you’re serious about staying around for the long haul. Ultimately, the more work you put into your application, the better your chances of approval for financing.

7 ways to become a successful Amazon seller

Amazon’s top sellers offer a number of strategies that can help you take your business to the next level:

  • Research your niche. Whether you sell products across categories or focus solely on one niche, get to know your market inside and out. Learn how others advertise and price similar items to find a competitive edge.
  • Build a brand. Amazon has thousands of sellers all vying for customers’ attention. Set yourself apart with branding that highlights what makes you unique — or what you offer that others don’t.
  • Market your page. Even if you aren’t running a dedicated website apart from Amazon, it doesn’t mean you should skip out on marketing. Reach out through forums and social media to get people familiar with your products.
  • Encourage reviews. Reviews can be crucial to an Amazon seller, especially if you hope to qualify for Amazon Lending down the road. Solid customer service may give you an advantage over your competition.
  • Offer sales and promotions. Discounts around the holidays can help build clientele and increase your sales. Plus, that extra revenue can offset cashflow lulls in the off-season.
  • Review your metrics. Understanding the data behind your business — sales, product views and returns — can help you form a strategy to improve numbers in the future.
  • Use Fulfillment by Amazon. FBA is often cited as a vital tool in stepping up your Amazon business. Although it cuts into your revenue slightly, not having to package and fulfill every purchase generally saves time — and money — in the long run.

Compare business loans now

Bottom line

Like any business, selling on Amazon takes careful forethought and planning. You may be tempted to sign the first loan you’re offered. But building a business plan and considering your options first is key to finding the best rates and terms you’re eligible for.

After all, knowing how to take today’s business into tomorrow can help you narrow down the right financing to meet your goals.

Learn more about business financing and compare lenders with our guide to business loans.

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