gets into small business loans

January 8th, 2013 by Chris

I just received this email:

[quote]Amazon is always looking for ways to help our sellers grow. We are excited to announce a new service: Amazon Lending by Amazon Capital Services, Inc.

Based on your Amazon selling performance you are pre-qualified for a loan up to $xx,xxx. Use these funds to purchase inventory and increase your sales on

How the Amazon Lending loan works:

Register for a loan. Sign in with your Selling on Amazon Primary Account holder user id and password.
If approved, the funds will be advanced to your Amazon Seller Account within approximately five business days, and we will initiate a disbursement to your bank account on file.
Your Amazon Lending monthly payment will be automatically deducted from your Amazon Seller Account.
Go to Amazon Lending to complete your loan registration. You will need to sign in with your Selling on Amazon Primary Account holder user id and password. You may also sign into your Seller Central Account, look for the Amazon Lending offer in the right hand column of the home page and follow the links to “Learn more” and “Register.”

If you have any questions, please contact us at

This offer expires on February 7, 2013. Registration for Amazon Lending is by invitation only.[/quote]

I find this interesting. As an Amazon shareholder I’m excited for the revenue potentials and it reminds me, quite frankly, of GE Capital. Amazon has gotten famous for getting really good at certain things, such as fulfillment, or Internet infrastructure and data processing, and then farming out their excess capacity. GE is famous for having really low corporate lending costs and then playing arbitrage by relending that money and making a profit on the interest rate spread. Not it seems as if Amazon is taking a page out of their own book and following GE into that same sort of thing.

On the other hand it also reminds me of relatively shady receivables lending. These companies want you to shift your credit card processing to them and then they’ll give you a loan financed by those credit card receipts, the terms are almost always horrible though and I feel as if they just prey on the desperate or the ignorant. What type of program Amazon is creating will depend on the interest rate, which I will check out and report back.

I may actually take advantage of this service. I have a manufacturing business now and while it is profitable it is capital intensive. Making a new product requires hundreds of thousands in upfront costs, and you don’t get that money back until it starts selling, enough capital to cover in between time, especially when you’re trying to do multiple products at once or otherwise expanding, can be difficult.


So, here are the terms they offered me.

12.9% APR with a 6 month repayment term, or 10.9% apr on a 4 month repayment term.

I do not think I’ll use it, I have existing lines of credit I can tap if need be at much lower interest rates. I also dislike the time limit “You must decide by February 7th.” That seems a bit like a high pressure sales tactic. This program may make sense for many sellers around the holidays, to help buy Christmas inventory, but we’re past that season now. In my opinion, at that interest rate, you need to have a lot more flexibility. I guess if you were a seller with no other access to short term credit it might make sense. I would only consider it if I exhausted my lines of credit and still needed more capital which at this point I do not think is likely.

10 Responses to “ gets into small business loans”

  1. Felix Lee  Says:

    Really? I wasn’t aware Amazon was going into the lending business. I think it’s a good idea that they’re loaning to their sellers to help them build their businesses.

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  9. 1nvent  Says:

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