One of the best ways to take your Amazon business to the next level is by expanding your inventory. However, this usually requires a working capital, and it can be hard to get the cash you need to grow your business unless you get a loan.
Deciding when to get funding for your Amazon business is crucial because if you get a working capital too soon, you could end up unable to pay the loan back. If you contemplate too long, you’d likely miss out on valuable opportunities like expanding your brand with new products.
Therefore, it’s vital that you get funding for your Amazon business at the right time and in the right amount to ensure you can expand your online business.
Furthermore, before you apply for business funding from a bank or other lenders, it would be better to think of yourself as a lender as well. And to be like a lender, you must do a thorough review of your business cash flow and finances. Doing such will help you determine whether it’s reasonable to borrow, and if the amount you’re planning to loan is something you can afford to take.
In addition, you also need to know your purpose for borrowing the money. If time is a crucial factor, you may consider borrowing from lending companies that can provide quick capital with a shorter approval process.
The good news is, there are lending options that offer working capital for Amazon sellers like you to help expand your business. You may consider the types of loans below before funding your business to help you decide which option is best suitable for your business objectives.
Sellers Funding provides working capital for Amazon sellers. It’s a financial solution that employs artificial intelligence to determine whether your Amazon business is capable of borrowing money. It looks at your performance metrics over six months of selling at a level of around USD$30,000. Within five minutes, you can immediately find out whether or not you’re qualified and if you can take the amount of capital you want, which takes just one to two business days.
Another good thing about this lending option to fund your business is that you can get another loan the moment you pay back 50% of your existing loan. But keep in mind that the interest rates for Sellers Funding range from 15% to 24% yearly. So, as an Amazon seller, just be mindful not to get into debt straightaway once you qualify for borrowing the capital you need.
Moreover, Sellers Funding has no hidden costs or large fees, and it provides you the flexibility to withdraw from your bank account for free.
A direct short-term loan is also a good option that provides working capital for Amazon sellers, especially if you’ve been an Amazon seller for at least a year and have reputable metrics. You may get an offer for a capital ranging from USD$1,000 to USD$750,000 with payment terms depending on your seller account. Although Amazon doesn’t explicitly say the interest rates it gives, some sellers who have benefited from borrowing capital from it reveal that it’s 6% to 16%. Moreover, note that you’d pay the repayments and interest directly from your market earnings if you apply for an Amazon loan.
If you don’t qualify for Sellers Funding or Amazon loan but need quicker or more capital, business lines of credit are another great option that gives a working capital for Amazon sellers. Most online lenders look for a few factors to determine the status of your business. For instance, they look for sellers who have been running an online business for at least a year and getting around USD$50,000 annual business revenue.
With lines of credit, you can expect to receive approval almost instantly once you apply for it. But keep in mind that approval doesn’t mean you’re bound to get the funds. You can hold this funding whenever you need it as an Amazon seller and only get funds when it’s necessary. That means you only need to pay the capital back when you borrow it.
Another way to get almost quick funding as an Amazon seller is by applying for a merchant cash advance (MCA). Merchant cash advances can also provide a working capital for Amazon sellers. You can apply online and be qualified with little to no paperwork because MCA lenders aren’t only looking for your credit score as the critical factor for approval. But just be careful of high-interest rates and ensure not to get in debt quickly because this type of lending is an unregulated industry.
Therefore, it would be better to ask the fees you’ll need to pay because they can vary from one loan company to another. In most cases, your credit score card sales are a determining factor for the lump sum you’re qualified to borrow, and you repay it with an extra fixed fee and a percentage of your sales.
When starting your own business, there are some things to consider, such as creating a business plan to determine your goals and seeking funding to get your online business started. But even when you’ve already established your Amazon business and looking to expand it, you may still face some challenges when looking to fund your business because traditional lenders may not know how to manage online business sellers. But fortunately, you can consider the types of loans above to help you get the working capital for your Amazon business as hassle-free as possible.