After more than a decade of offering financing and loans to sellers on the marketplace, Amazon Lending has closed its books. On March 6, 2024, Amazon Lending announced, via email to sellers, that the Lending division would cease underwriting its own loans.
This came as a shock to many in the eCommerce community, including sellers with active loans who were informed that current loans would continue to be serviced but “new loans underwritten by Amazon will no longer be offered.” This sudden announcement poses big implications for sellers who have historically relied on this financing to streamline their cash flow and finance their business, likely creating a gap in capital for many.
What is Amazon Lending?
The Amazon Lending division was launched in 2011 as an in-house business financing solution for sellers to access short-term capital. The invite-only program offered term loans, lines of credit, and revenue-based funding options from directly within Seller Central accounts to help support inventory orders. By processing and disbursing the loan through Seller Central, sellers were able to receive funding far quicker than a loan through traditional banks, drawing massive attention and popularity.
With the recent decision to halt this program, sellers will need to find a new funding provider or face cash flow challenges for their business as remaining loans come to an end.
Why is it going away?
Since the end of Amazon Lending has come as a surprise to many in the eCommerce community, there has been much speculation as to reasoning. While the exact reason remains uncertain, it’s clear that Amazon has other priorities. In their email to sellers, Amazon Lending stated that they would continue to offer funding through Seller Central via “trusted third-party providers” as an alternative, thus minimizing financial responsibility.
However, acquiring capital with these “trusted third-party providers” will require sellers to start an entirely new funding relationship with an unknown and unfamiliar company. Additionally, since Amazon Lending has been active for more than a decade, many sellers are losing long-standing relationships with a platform who has already developed an understanding of their business overtime. As one of these “trusted third-party providers” Viably aims to begin easing the process for sellers as soon as possible, ensuring a seamless transition with full trust and transparency.
By choosing to transition to one of the third-party lenders (Amazon has yet to name), sellers will have to reestablish relationships with their business. This means higher scrutiny on initial loans, harsher terms, and likely delays in funding compared to Amazon’s in-house program. However, the end of Amazon Lending also creates a unique opportunity for sellers to establish new relationships with funding providers that fit their business better than previous lenders.
While Amazon Lending was convenient for Amazon sellers, they often faced hidden fees, high interest rates, and more financial obstacles. By establishing a new, stronger relationship with funding providers that take the time to understand their business upfront, sellers can potentially find partners that will truly enable sellers to grow their business more successfully and sustainably in the long run.
Who are Amazon’s “trusted third-party” lenders?
Although Amazon will act as a platform to connect sellers with other lenders, rather than being a lender itself, Amazon is yet to release information about those “trusted third party” providers. However, with limited information available it’s time to begin exploring all available options for financing to ensure that they find a provider who fits with their business. Any wise Amazon seller will prefer working with lenders that they trust and can build a personal relationship with, rather than a faceless provider.
Money is a service business, and the key to forming a longstanding relationship with a funding provider is identifying who can consistently provide the attention to detail required for growth. That’s why Viably focuses on developing strong personal relationships, building that trust and understanding between the seller and the provider. This includes understanding pain points, offering additional resources, and providing more funding when sellers need it.
Before applying for funding, Amazon sellers need time to research and evaluate whether a provider can help meet their financial goals. It’s also important that sellers take the time to read terms and determine whether or not they find a provider to be trustworthy and well-suited to their personal Amazon business.
Potential Replacements
| Speed | Convenience & Flexibility | Personal Guarantee | Cost | |
| Credit Cards | 3-5 Days | Cards for Purchases, Lines of Credit | Required | Average 23% Interest Rate |
| Friends & Family | Unknown | Cash Potentially Available for Use on Anything | Unknown | Unknown |
| Banking Loans | 4+ Weeks | Cash in Bank Account for Explicit Uses | No | 2-5% Interest Rate |
| Viably | 24 Hours | Cash in Account for Anything | No | One-Time Flat Fee of 3-8% |
Long gone are the days where it felt impossible to find funding for eCommerce businesses. Despite the end of Amazon Lending’s chapter, a myriad of specialized funding providers exist today to support Amazon sellers in their journey to scaling. However, it’s critical that sellers choose a funding solution that will remain sustainable in the long run and can scale alongside their business.
Credit Cards
For sellers with little to no business history, or limited time on the marketplace, credit cards can be an attractive financing option. Credit cards are convenient, easy to obtain, and can come with a range of advantageous benefits, such as cash back or flight points. They’re also incredibly quick to obtain–meaning no long waits for approvals and capital available at sellers’ fingertips rapidly.
However, credit cards can quickly become expensive if even a small balance is allowed to be carried over. Additionally, all credit cards require some sort of personal guarantee. This means that personal assets will become tied to business expenses, making things complicated if sellers ever face financial difficulties in their business. At an average rate of 23% interest on credit card loans, the cost of capital becomes increasingly steep–threatening to create more harm than growth for an eCommerce business.
Family & Friends
Many sellers choose to crowdsource from friends and family rather than relying on institutions for funding, often because of the personal connections and trust inherent in these relationships. This option becomes attractive when individuals within one’s network express interest in investing in their business or when they seek to circumvent dealing with large corporations with rigid terms and conditions.
However, this approach, while initially built on love and trust, can lead to financial dependency on family and friends, causing personal stress for many eCommerce business owners. Additionally, it often entails relinquishing a percentage of ownership in the business to obtain capital, which is seldom sustainable over the long term.
Banking Loans
Experienced sellers may qualify for traditional banking loans to continue funding their Amazon growth. One of the biggest advantages in banking loans is that they typically possess low interest rates, which can be extremely beneficial in the long run. They also often come with flexible repayment schedules and can sometimes provide access to additional funding if sellers need it.
Banks offer various types of loans with a range of terms and conditions, making it a complex decision, however, it’s important to understand the benefits and drawbacks of a potential loan fully. Additionally, it’s a challenging process for even the best entrepreneurs to obtain bank loans, and even harder for Amazon sellers to qualify due to their rigid underwriting processes. It takes a significant history of sales, and oftentimes established business success outside of eCommerce, to qualify for traditional banking loans. On top of that, there are often delays in receiving capital.
Viably
Change can be daunting, especially when sellers have been working with Amazon Lending for years to finance their business. It’s crucial that they find a replacement that takes the time to understand their Amazon business, and can grow sustainably with it over time.
That’s why Viably offers an all-in-one financial solution for Amazon sellers. With a comprehensive suite of banking, funding, and forecasting tools sellers can receive a complete picture of their business’ financial health within minutes–helping them to make data driven decisions. Plus, they can have working capital within their bank account in 24 hours with our convenient and seamless application and underwriting process.
Viably offers a truly custom funding experience with a real human to guide sellers through the process instead of automated third party offers that may not align to their business operations or cash conversion cycles (not to mention no one to speak with). Our people first approach ensures that sellers will receive tailored funding offers to help grow their Amazon business sustainably, based on their unique data.
How will you fund your Amazon business?
The full impact of this decision on sellers remains to be seen. With so little information available about how Amazon Lending will evolve with third-party providers it’s unclear whether or not sellers will embrace the transition or seek new options. Some sellers may struggle to find financing elsewhere, especially if they are new or have limited credit history, while others will likely thrive under more personalized funding plans and specialized providers.
If you’re looking for a new way to finance your Amazon business, Viably is ready to help. Ditch unknown third-party providers for a funding solution that wants to understand your needs today. Sign up for free and connect your accounts to see how much funding your business could receive.
