Amazon offers its merchants a new funding option that allows marketplace sellers to access funds in the form of a cash advance on future sales.
The new solution gives eligible Amazon sellers – most of whom are small and medium-sized businesses – access to capital $500 up to $10 millionto expand their business, protect margins, develop new products, increase inventories or manage cash flow.
Supported by paraffin, Amazon Merchant Cash Advance offers a flexible payment schedule determined by a fixed percentage of the seller’s Gross Merchandise Sales (GMS) until the funding is disbursed. Unlike a traditional loan, the funds have no minimum payment requirements, no interest (instead, borrowers pay a fixed principal fee), no security requirements, no credit check, and no late fees. Perhaps most importantly, payments are only required during periods when a seller has made sales.
The new financing option joins Amazon other financing solutions for sellers, which includes term loans, interest-free loans, and lines of credit provided by both Amazon and third-party financing partners. Merchant Cash Advance is now available for some US-based businesses that have been selling on Amazon for at least at least three months and will be extended to hundreds of thousands of eligible sellers by early 2023.
“Amazon is committed to providing our sellers, regardless of their size, with convenient and flexible access to capital,” said Tai Koottatep, director and general manager of Amazon Worldwide B2B Payments and Lending, in a statement. “Today’s launch is another milestone in strengthening Amazon’s commitment to sellers and builds on the strong portfolio of financial solutions we already offer. This latest offering significantly expands sellers’ reach and capabilities, expanding their access to capital in a flexible way – a way that helps them take control of their cash flow and, in turn, their entire business.”