Different Financing Options for Amazon Sellers
Guest Post from Payability
By Kevin Weeks
As an Amazon seller, you’ll agree that it’s impossible to grow your business without capital. After all, you need funds to keep up with growing demand — whether to buy more inventory, expand your product line, or hire new employees.
But when Amazon takes two weeks to pay you, any growth your business may be experiencing is in jeopardy. Simply put, you can’t reinvest in growth if you don’t have a readily available source of cash.
Luckily, there are financing options for Amazon sellers that can help you grow your business without worrying about your next paycheck. Take a look at these common funding options:
Personal Savings & Credit Cards
Many Amazon sellers rely on personal savings and credit cards to get their businesses off the ground, buy inventory and scale. But this isn’t the most sustainable option. Even though you have immediate access to cash, you’ll eventually run out of money or reach your spending limit. And, if you don’t pay your credit card bills on time, you run the risk of recurring high-cost interest payments, not to mention dings to your personal credit score.
If you do want to go the credit card route, look into business credit cards instead of personal ones — there may be better rewards programs or interest rates, and you’ll be building business credit, which will help you get financing from other sources in the future.
Crowdfunding or Friends & Family
If you are a private label seller with a really cool or promising product, you may want to consider crowdfunding on a site like Kickstarter or by asking friends and family to invest. Depending on the route you take here, the cost of funds could be one of three things: 1) nothing, 2) a small gift or “reward” for a certain donation amount, or 3) equity in your business.
Keep in mind that funds are not always guaranteed. Most crowdfunding sites require a minimum amount raised, otherwise you won’t receive anything. And, some friends or family members may not be comfortable giving you a loan.
These days, there are several types of business loans on the market — from a traditional bank loan or line of credit to an online business loan to an Amazon Lending loan.
Traditional bank financing is known to have low interest rates and longer payment terms, but the application process is very time-consuming and approval rates are low. On the flip side, online business loans offer easy application processes and high approval rates, but the cost of funds is higher, and payment terms are shorter, often requiring a daily or weekly auto-debit. With Amazon Lending, their loans are on an invite-only basis. If you qualify, you’ll see an offer with loan terms in Seller Central.
While you’re checking Seller Central for an Amazon Lending offer, you may see an offer from Payability, a financing company that provides high growth Amazon sellers with daily cash flow so they can stay in the Buy Box, buy inventory at optimal times and get the best deals from suppliers.
With Payability, you can access 80% of your Amazon earnings one business day after making a sale. It’s a modern-day invoice factoring company that allows you to put your Amazon earnings to work right away at a 2% flat fee. And even if you don’t see an offer in Seller Central, you can apply directly at Payability.com.