Amazon is offering its merchants a new financing option that gives marketplace sellers access to funds in the form of a cash advance on future sales.
The new solution gives eligible Amazon sellers — the majority of which are small- and medium-sized businesses — access to capital, from $500 up to $10 million, to expand their businesses, protect margins, develop new products, grow inventory or manage cash flow.
Powered by Parafin, Amazon Merchant Cash Advance features a flexible payment schedule that is determined by a fixed percentage of the seller’s Gross Merchandise Sales (GMS) until the funding is paid off. Unlike a traditional loan, the funds come with no minimum payment requirement, no interest (instead, borrowers pay a fixed capital fee), no collateral requirement, no credit checks 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’s other funding solutions for sellers, which include term loans, interest-only loans and lines of credit provided by both Amazon and third-party financing partners. Merchant Cash Advance is now available to some U.S.-based businesses that have been selling on Amazon for at least three months, and will expand to hundreds of thousands of eligible sellers by early 2023.
“Amazon is committed to providing convenient and flexible access to capital for our sellers, regardless of their size,” 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 provide. This latest offering significantly expands sellers’ reach and capabilities and broadens their access to capital in a flexible way — one that helps them control their cash flow, and by extension their entire business.”