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Having an Amazon business can come with a lot of moving parts. One of them involves finances. It’s obvious that you’ll need money to run a business. That’s because you’ll need to pay for certain expenses and overhead.
Amazon has what is known as business financing. We will do a deep dive into what it is and how it can benefit Amazon business owners. This guide will give you the basics of Amazon financing and how you can get the best financing possible so you can grow your business as fast as possible.
Running a business can help make you more money in the long run. However, it’s important to determine what will be ideal for expenses so you don’t have to spend an arm and a leg on the things you need to keep a business afloat. One such thing you may need for your business is a software program that can help automate most of the tasks.
IO Scout is a program trusted by many Amazon business owners for its powerful set of Amazon FBA tools , that comes with a personal assistant that will know your Amazon business like the back of your hand. And guess what...it’s not as costly unlike some programs. With that said, let’s dig in with information on Amazon Business Financing and how it can help you.
The way Amazon Financing is designed to provide financial services including credit to Amazon businesses. This includes Amazon sellers who tend to sell a high volume of items on a regular basis. Allowing owners business credit so they can spend money on business expenses is not new among major retailers.
Since 2011, Amazon has been involved with small business lending (even though they have already had their foot in the door in terms of financial tech). From there, Amazon began to offer credit cards to business owners and shoppers. We’ll be taking a look at the different financing options that Amazon currently offers so you can be able to determine which will fit best for your business.
Amazon offers a total of three financing options (all of them use credit cards). Let’s take a look at each card and what benefits you can get out of each of them:
First, we’ll be taking a look at the Amazon Store Card. This card has two different versions: one of them is for Amazon Prime members and the other is for non-Prime members. This card has no annual fees and those with Prime membership will be able to receive 5% cashback with any Amazon purchase.
As an incentive of being a cardholder, users will receive an Amazon gift card. There are different financing options available including promotional and special financing options. Cardholders can also opt for monthly financing so they can make payments that fit their budget.
For equal monthly payments, they will depend on the minimum purchase. They are as follows:
The cardholder can make one of these three payments depending on the purchases made. The APR rate is 0% throughout the financing period. The payments will also be subject to taxes and shipping (which is divided by the length of financing.
As an example, let’s say that you purchase something on Amazon that is $1000. You have the option to pay it off in six months or a year. If you opt for a year, then 1000/12 will equal out to $83 a month (or approximately $166 if you opt for the 6-month plan).
If the user has a remaining balance that is carried over beyond the end of the period, late fees will be included until the balance is paid in full. On paper, a $1000 purchase that can be paid off in 6 to 12 months doesn’t seem all that bad. You may also accrue interest as well.
Like the equal monthly payment option, the special financial option also has a three-tier structure. The tiers are as follows:
Like the equal payments, a monthly minimum will be needed for paying off the balance. Plus, customers won’t pay any interest if the balance is paid off within the specified time period. You will also be eligible for late fees and additional interest if the balance remains.
As of today, the APR for Amazon Special Financing is 27.49%. This special financing option may not give you a lot of leeway compared to the equal payment option. So if you don’t want to pay more than you have to, it’s imperative that you pay off the balance before the financing period ends so those extra charges are not tacked on.
Amazon launched its Rewards Visa Card in 2017. Like the store card, it offers two versions of it to both Prime and non-Prime members. Upon approval, users will receive an Amazon Gift Card.
The Rewards Visa Card has separate APR rates. Prime members will have an APR rate of 14.24% while the non-Prime users will have a 22.24% rate. This will also depend upon the credit score of the cardholder.
Registered Amazon customers can be eligible to sign up for the card and be approved. There are no annual fees and no foreign transaction fees will also be accrued. Amazon has partnered with Chase Bank for this rewards card. The rewards are offered at various levels.
Cardholders can receive 3% cashback on all purchases made on either Amazon or Whole Foods. They can also receive 2% cashback on all purchases at participating gas stations, restaurants, or drug stores. Cardholders will get 1% cashback on all other purchases.
Cardholders who are Amazon Prime Members can also receive an additional 2% cashback on Amazon and Whole Foods purchases.
Also known as the Amazon Prime Store Card Credit Builder, this card was launched last year as a way to help those with bad credit build it up. Cardholders must make a deposit anywhere between $100 to $1000 to start. This deposit will serve as the credit limit, so the higher the deposit, the better.
Cardholders will be eligible for the same benefits as those who hold one of the previous two cards. Therefore, there are both equal monthly payments and special financing options are available.
Aside from credit cards, Amazon also provides other payments types that customers can take advantage of. They are as follows:
As of last year, there have been discussions regarding checking accounts through Amazon. At this point, the other major company to go about doing this is Google. There have been no plans for Amazon to do the same as of 2020.
Amazon business owners have financing options that are available to them at any given time. There are five different options that they can choose from. Each of them come with their set of criteria along with their pros and cons.
Here are the following options:
A microloan is issued by the Small Business Association (SBA). It’s intent is to provide capital to those starting out and looking to expand their business. Applicants who qualify will receive up to $50,000.
Those who intend to apply for an SBA Microloan must be aware of the following terms:
The terms and rates will vary from one lender to the next, so it’s important to consider your options as to which lender you want to go through.
In order to be eligible for these loans, you must meet the following criteria:
Pros and Cons
Amazon provides its own lending service. However, it’s not as open as SBA microloans. You must receive an invitation by Amazon in order to take advantage of this service.
This is exclusive to Amazon business owners that are small or medium in size. This will provide short-term financing options to sellers that meet a certain criteria.
To be eligible for Amazon Lending, you must meet the following criteria:
Pros and Cons
This should not be confused with Amazon Lending (since they are both different from each other). This allows a line of credit to business owners who are looking to expand beyond their current form. Those who use this line of credit will be able to take out as much money as needed instead of a large sum.
Like Amazon Lending, the program is by invitation-only.
Credit Limit: Up to $1 million
Credit Length: Revolving. You can use it and pay it off when you need to.
Interest Rates: 6.99% to 20.99% APR
Other than the fact that it’s by invitation only and for Amazon sellers, not a lot of information is disclosed by Amazon or it’s partner, Marcus by Goldman Sachs. Please note that your Amazon seller’s account information will be shared with the latter.
Pros and Cons
FinTech lenders are fast becoming the go-to option among those who are in eCommerce or online business. There are four different FinTech lenders each with their own criteria: AccrueMe, Payability Capital Advance, Kabbage, and Sellers Funding. Please note that their requirements will differ from one another.
Be sure to choose the best lender that fits your personal needs and qualifications. You may be rejected by one lender but may be approved by another. So have a backup plan in case your initial lender denies your application.
Kabbage and PCA are two lenders that can give you up to $250,000 in money in as little as 24 hours.
These are unsecured loans that can be offered to business through traditional banks. Alternatively, secured loans can also be available depending on which bank you go through. If you opt for an unsecured loan, you will need collateral.
This is perfect for those who are starting out and have no sales history at all.
Here are some requirements you must meet in order to qualify:
Pros and Cons
The question that you must ask yourself next is what is the right option for you, the Amazon business owner? If anything, FinTech lenders and the Amazon Lending and Credit services might be your best options. That’s because they all have a better understanding of your business needs and what you’re planning on using the money for.
After all, they are more online business centric unlike regular business loans, which are closely aligned with physical retail businesses and the like.
Below are the following advantages that business owners will get if they go through non-traditional lenders. Here’s what you’ll get:
While we are on the subject of financing, IO Scout is an excellent tool that will be helpful in making sure that your finances are in check. You have a personal assistant that you can access 24/7 so you can be able to see what needs to be done with your Amazon business. For example, you can keep track of when your next finance payment is so you don’t miss a beat.
Bank loans won’t be a good option for Amazon business owners. Especially if they have been in business for as long as one year. Plus, they will also be at a greater disadvantage since banks will require a business plan, collateral, and other required items in order to be approved.
As mentioned, most bank loans are more geared towards brick and mortar businesses as opposed to online businesses. With that in mind, here’s what the bank would request from you:
If you are brand new to selling on Amazon and don’t qualify for a loan, all hope is not lost. You can work with as little capital as possible. However, it’s important to reinvest your profits into building the business for a certain period of time.
At some point, you may generate a consistent amount of sales that can help you qualify for loans from non-traditional lenders. However, you’ll need to keep any kind of financial documents handy just in case they are needed. The timing will depend on how often you are focused on building the business.
Yes, you can. You can be able to finance on Amazon using one of the credit cards listed above. As a business owner, you can also be able to use Amazon’s financing options if you receive an invite to do so.
There are items that can qualify for financing on Amazon. For example, consumer electronics can qualify for financing. You can be able to pay the remaining balance using your Amazon credit account. You won’t need to make no interest payments until at least a year after.
Yes. Amazon has 12 month financing in the form of equal monthly financing or special financing. This will depend on qualifying items sold on Amazon.
Yes. Like 12 month financing, 24 month financing is available in equal monthly financing or special financing. Products like computers and laptops are a couple of example items that qualify for this.
In order to qualify for Amazon monthly payments, you must meet the following criteria: Be a resident of the United States, have an active Amazon account for over one year, have a valid credit card tied to your account, and have a good history of payments on Amazon.
It can be easier for Amazon business owners to get the best financial options in order to grow their business. Whether you qualify for loans or not, it is possible to build up your business as quickly as possible. If you are looking for a great tool for your Amazon Business that won’t cost you an arm and a leg, you’d be crazy to go with anything but IO Scout.
IO scout has plenty of tools that you can use at your disposal in order to stay one step ahead of things on Amazon. It is the only software that will give you tools that are more powerful than competitors. And you get it all at a price that you can afford.
How does $14 a month (annually) sound? Why not $29 a month when billed monthly? Either way, the price is reasonable since you have other expenses to focus on.
Check out IO Scout today and keep your Amazon business finances in check. No more missed payments, no more late fees, no more penalties and interest accrued. It makes the financial aspect of your Amazon business a whole lot easier.