New Marcus line of credit available to Walmart sellers

Walmart announced the launch of a new line of credit available to e-commerce sellers through a partnership with online lender Marcus by Goldman Sachs.

The line of credit is currently only available by invitation to sellers who are in good standing with the company but may expand to more sellers in the future. It’s relatively low cost compared to other similar types of financing, but it comes with biweekly minimum repayments that might be difficult for some small business owners to sustain.

Small and midsize businesses can use the credit line to finance inventory and other ongoing working capital expenses. With shopping trends drastically changing due to COVID-19, it could help sellers stay on top of trends.

“Lines of credit offer businesses the flexibility to access money when they need, which could help them move fast and meet surging customer demand,” said Vice President of Walmart Marketplace Jeff Clementz in a statement. “It could also help fund innovation as we’re all working to adapt to constantly changing customer behavior and preferences.”

How it works

Business owners who receive an invitation can apply for credit lines from $10,000 to $75,000 — for now. Marcus has plans to increase the maximum limit in the future. To access the line, borrowers are required to make a minimum draw of $500.

The line of credit comes with a 12-month draw period, with a minimum payment due every two weeks. Once the draw period is up, borrowers have the option to renew the credit line. Otherwise, they can repay the remaining balance like a term loan over the next 12 months. Repayments on the loan are due every two weeks, and there’s no penalty for paying it off early.

How much does it cost?

Rates range from 6.99% to 20.99% APR — relatively low compared to other similar providers. This includes an origination fee and annual maintenance fee, which Marcus will waive if your business is using more than 30% of its credit line.

The only other fee you might pay is a late fee of either $25 or 5% of the late payment, whichever is greater.

What kinds of sellers qualify?

Generally, this line of credit is available to sellers that have been in business for at least two years and have a US checking account. Borrowers also must have at least 25% ownership of the business to apply for a loan.

Marcus continually monitors business eligibility even after approval. All businesses must continue to meet requirements when they request funds from the line of credit.

If a business initially qualifies but takes a hit, it might not be able to draw from the credit line. Businesses that receive draw request rejections might not be able to request another draw for 30 days.

How to apply

Walmart Sellers can start their application by checking their eligibility at the Walmart Seller Center. You can do so by following these steps:

1. Log onto the Walmart Seller Center.
2. Go to Settings and hit Financial Settings.
3. Select the Lending Offers menu.

If you’re invited to apply, you should see a banner with an offer link. Follow the directions to provide information about yourself and your business, and submit any required documents.

You should receive a decision within two days of submitting an application.

How does it compare?

The Marcus by Goldman Sachs line of credit is a relatively competitive deal compared to other seller financing options. Many e-commerce platforms that offer financing charge flat fees that can result in triple-digit APRs and are often not a good deal.

This line of credit comes with rates that are more in the ballpark of a personal loan than online business loan. And while the biweekly repayments are less frequent than some seller financing options, it’s not as flexible as a traditional term loan.

Sellers who can qualify for this loan might be tempted to apply. But they should first compare other options to make sure it’s the right choice. Even other online lenders might offer a more favorable deal.

What is Marcus?

Marcus is an online lending arm of Goldman Sachs. It originally only offered personal loans targeted at borrowers with good credit. But it’s begun to expand into other types of lending and financial products.

It recently announced a similar partnership with Amazon to offer lines of credit to its sellers at the same rate — but slightly higher credit limits.

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