Amazon Lending in Australia: Availability Update
A quick google search and you’ll find surprisingly little content directly from the behemoth that is Amazon about their Amazon Lending feature. And with good reason too, Amazon Lending is an invite-only program. Start selling and growing your Amazon business though and if Amazon deem you a good fit for the program you’ll receive an invite.
What is Amazon Lending?
Amazon Lending is where Amazon will offer small business owners who sell on Amazon a loan directly through Amazon Seller Central based entirely on their Amazon sales performance (working capital loan). You may not have heard of it before but Amazon lending has been around since 2012. Growing rapidly in its incumbent years, Amazon’s loan book growth has slowed down recently, but they are still offering over $1 billion in loans to Amazon sellers every year.
In theory, Amazon should have a strong idea on what is a sensible loan amount and repayment terms to be applicable to each eligible Amazon seller.
There’s no complex application procedure as Amazon reach out to each seller with the maximum amount they are willing to lend. All the seller is required to do is either accept or decline the offer and decide on the amount they would like within their pre-agreed limits set by Amazon. The interactive calculator then shows the interest due based on the repayment terms selected, so sellers will know exactly what the cost of the loan is. Amazon will then credit the sellers account as quick as 1-2 days after acceptance.
What are the terms of Lending by Amazon?
Amazon offers its sellers loans between $1,000 – $800,000 (USD) with a maximum repayment term of 12 months.
Annual interest is reported to be between 6-17% and often praised by small business owners for being significantly cheaper than interest available from banking partners. Crucially there’s no arrangement fee either. The interest on the loan is not paid in the usual manner, Amazon will simply take a greater percentage fee from each Amazon sale you make. So if sellers take this into account when calculating profit margins they can begin to make a more informed decision on whether this loan is a viable option for them.
Where is Amazon Lending available?
Amazon first launched the service in two of its core markets, the US and Japan. It then expanded the offering in 2015 to Canada, China, France, Germany, India, Italy, Spain and the United Kingdom. As it stands, Amazon does not currently offer lending to Australian sellers. Online sellers in Australia may be better off looking at PayPal’s small business loan offering.
Will Amazon Lending launch in Australia and if so how would it compare?
Amazon Lending could still be a little way off in Australia. In fact, Amazon has even stopped offering small business loans in Japan which was one of its core markets. In conjunction, Amazon has also recently begun a large recruitment drive for credit analysts and finance experts from financial services firms. So it would appear that, rather assuringly, Amazon is still investing in this division but looking to get the core offering correct before any further expansion. The firm is at least looking to do things correctly and responsibly.
If Amazon Lending is to launch in Australia there’s also the question of whether this would even be the right option for Australia’s small businesses. Arguably it could be a very good option for Amazon-only sellers. Amazon would have extensive data of your only sales channel and will be able to offer a favourable rate of interest based on 100% oversight of your sales channel. For small businesses selling direct or on other marketplaces it may not prove as strong an option.
The other key benefit Amazon Lending provides is they open up credit opportunities to the small business market who would traditionally struggle to receive any form of loan from a bank. This issue, however, is exactly one of the core issues that other small business loan providers in Australia like Prospa or GetCapital, or even lender from our small business loan comparison, solve too. Amazon Lending would also be limiting for businesses requiring a greater variety of funding options or repayment terms beyond 12 months.
View our best Amazon lending alternative for small business here: