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 – the majority of which are small and medium-sized businesses – access to capital, from $500 to $10 millionto grow their business, protect their margins, develop new products, increase their inventory or manage their cash flow.
Powered by Paraffin, Amazon Merchant Cash Advance offers a flexible payment schedule that is determined by a fixed percentage of the merchant’s Gross Merchandise Sales (GMS) until the funding is repaid. Unlike a traditional loan, the funds come with no minimum payment requirements, no interest (instead, borrowers pay a fixed capital charge), no collateral requirements, no verification credit and no late fees. Perhaps most importantly, payments are only required during periods when a seller has made sales.
The new financing option joins that of Amazon other financing solutions for sellers, which includes 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 select US-based businesses that have been selling on Amazon for at least Three months, and will extend to hundreds of thousands eligible sellers by early 2023.
“Amazon is committed to providing convenient and flexible access to capital for our sellers, regardless of size,” said Tai Koottap, director and general manager of Amazon Worldwide B2B Payments and Lending in a statement. “Today’s launch is another step in strengthening Amazon’s commitment to sellers and builds on the strong portfolio of financial solutions we already offer. This latest offering dramatically expands sellers’ reach and capabilities and expands their access to capital in a flexible way, helping them control their cash flow and, by extension, their entire business.