If you're an eCommerce seller, you know that funding your business is not a small task. The more money you have in the bank, the easier it will be to focus on growing your business and improving customer service. However, suppose you're like most sellers and have been unable to get enough cash flow from traditional lending sources (like banks). In that case, several options are still available for funding your eCommerce business.
You Don't have to let Your Cash-flow Worries Hold You Back
You don't have to let your cash-flow worries hold you back. You can get funding to grow your business or start a new venture with suitable financing options. You'll also find that it's easier for small businesses and startups to secure loans—and even large companies are finding success with online lenders like Lending Club and Prosper Marketplace.
One of the most common misconceptions about small business loans is that you need insurance before you can get one. This isn’t always true. Insurance is often required for large loans and also if your business has a high debt-to-value ratio (meaning you owe more than the value of your assets). But it's not always necessary for small businesses to secure funding.
What is PPO insurance: A Preferred provider organization (PPO) is a type of health insurance that allows you to choose between different doctors and facilities. You also have access to lower co-pays, which can save you money over time. PPOs are generally more expensive than HMOs and POS plans because they cover out-of-network benefits for a higher percentage of your medical expenses.
Compare the Alternatives
Before applying for any loan, you should compare the alternatives and ensure you get the best possible rate. Don't forget to ask for a free quote from lenders and ensure they understand your needs before signing on the dotted line.
You'll want to check your credit score first because this can determine how much money is available in each potential lender's pool of borrowers (and thus how much they're willing to loan). Next up:
Credit history: This includes things like late payments or bankruptcies—recent events could affect your score negatively if they're not reported correctly in this area.
Credit report: Each lender will have its policy on who gets access to their reports; some may only share with certain types of lenders or businesses like lawyers or insurance companies (or even law enforcement agencies), and others will give access without charging fees per pageview so long as there aren't any errors found during the review time frame(s).
Here are 9 Funding Options for Amazon Sellers:
Amazon Lending - The most prominent and widely used option, this program allows you to borrow money through Amazon. You can apply online or over the phone, and they'll approve your application in as little as 24 hours. Once approved, you can use this money to purchase inventory items on Amazon. The interest rate is variable but typically around 2%, so it's hard to find a better deal than that! Plus, if things don't work out with your first loan request (which happens sometimes), there's no penalty for trying again later down the road!
01: Amazon Lending
Amazon Lending is a financing option for Amazon sellers. It's a line of credit that you can use to fund your inventory purchases, and it's available to all Amazon sellers, even those who aren't yet approved for Vendor Express Financing.
Amazon Lending has no annual fee, but there are still some essential things to remember before signing up: It's only available to Amazon sellers with a Professional Selling Plan subscription.
You'll need to request approval for the program, and your eligibility will be based on factors like your sales history and customer feedback ratings. The rate you're offered is determined by several factors, including your credit score, inventory levels, and industry performance.
02: Vendor Express Financing
Vendor Express Financing is an option for Amazon sellers to finance inventory purchases. Amazon will pay your suppliers directly, and you can pay them back in installments. Vendor Express Financing is available to sellers with a large sales volume and at least $25,000 in annual sales on Seller Central.
03: PayPal Working Capital
PayPal Working Capital is a financing option for PayPal merchants. You can borrow a maximum amount of $50,000 and make monthly payments through PayPal's online application. Interest rates are competitive; you'll pay less than what traditional banks charge on other loans of similar size and duration—and there's no collateral needed to secure your loan.
PayPal Working Capital: How It Works
Before you start thinking about getting a loan from Amazon Lending or another lender, it's essential to understand how these services work.
04: Payability Instant Access
Payability Instant Access is a small business loan used for inventory, marketing, or other business needs. It's available in amounts of $5,000-40,000, and the loan is repaid over 12 months with a fixed interest rate.
You can borrow up to $100,000 at this rate—and it's free! No credit checks are required for this option. Suppose your account is in good standing and you meet all eligibility requirements when you apply for funding on the Amazon Lending marketplace (which includes having an active A+ rating from the Better Business Bureau). In that case, Payability will approve your request within 24 hours.*
05: Quick-Turn fulfillment Loans from Quickbooks Capital
Quickbooks Capital is a peer-to-peer lending platform where you can apply for a loan of up to $50,000. The borrower needs to be an Amazon Seller who can apply for Quickbooks Capital's Quick-Turn fulfillment Loans. This is the best option if you need money to pay off suppliers but don't want to wait several months before receiving your funds back.
You will not only get the money from Quickbooks Capital in 90 days but also have access to other funding sources like banks and even credit cards!
06: Payday Loans
Payday loans are a form of short-term, small-dollar credit. They're designed to help borrowers bridge the gap between paychecks, usually for under $1,000.
Payday loans can be extremely expensive if you don't pay them back on time. If you manage to pay off your loan in full by the due date (or within 30 days), then your interest rate will be significantly lower than it would have been otherwise.
07: Crowdfunding Platforms
Crowdfunding platforms are a great way to raise money for your business. Some of them are better than others. They all have benefits and drawbacks. Here's how to choose the best crowdfunding platform for you:
Make sure the platform has a good reputation in the industry. You don't want to be stuck paying fees for something that doesn't work out or get shut down by the SEC (SEC = Securities and Exchange Commission).
Look at what each platform supports types of businesses—you might find one more suited to your needs than another! For example, Lending Club supports small businesses like yours; if you need both funding options available on a single platform, then go with Lending Club instead."
08: Overdraft Protection on Your Business Checking Account
Overdraft protection on your business checking account is a good option for Amazon sellers. The service also offers overdraft protection, which means you can get up to $250 in overdraft fees returned if your transactions don't go through. You'll also be able to set up automatic returns for purchases made with debit cards or credit cards without going through the hassle of calling customer service each time and having them manually approve the transaction.
What does it cost? For most banks, it's around $15 per month plus a small fee based on how much money you have in your account at any given time (the most common fees are 3% if there's less than $1,000 available in the account; 5% otherwise). That's still cheaper than some other options out there!
09: Bank Markers for Purchase Orders (POs)
Another way to get money from Amazon is through purchase orders (or POs). This is an alternative to a traditional bank loan and is interest-free. You can use the funds for anything, including buying inventory and paying suppliers.
There are many ways to fund your business, and we hope this article has given you some insight into what's out there. However, if you're still feeling stuck or confused about whether or not you should take a loan, we recommend you talk with a professional risk manager about your options for funding. They'll be able to give you unbiased advice on different types of loans and determine which is best for your unique situation.
If you need help deciding or want to learn more about how fulfillment by Amazon can streamline your shipping process, get in touch with Simpl fulfillment. We’re here to help small businesses grow and succeed—and that includes helping them access the capital they need to thrive.
Recommended: 9 Free Amazon FBA Tools in 2021