Financing and business loans can open up a world of opportunity for your Amazon FBA business – along with offering huge upside to grow and scale your operation. As you’ll see below, one of the largest benefits to financing is the acceleration in business growth. With financing, you’ll have the capital you need to buy inventory in bulk, which can lead to cost savings.
It can also help you take advantage of opportunities as they arise – such as new product launches and expanding out to new categories. This even includes added flexibility to invest in other areas of your business, such as marketing and advertising. Ultimately, financing can be a great way to accelerate the growth of your Amazon FBA business.
By the end of this article, we’ll cover each of the best financing and loan options for FBA sellers – including traditional financing, private funding services, and even Amazon’s own financing options. Use this outline to skip to any section of this page:
- Reasons to secure Amazon FBA funding, financing & loans
- Amazon funding options
- Merchant Cash Advance
- Banks & traditional loan providers
- Private retail funding services
- Final thoughts on Amazon FBA funding, financing & loans
Reasons to secure Amazon FBA funding, financing & loans
Launching your business
One of the best things about starting an Amazon FBA business? It doesn’t require a lot of capital. You can launch your business with very little up-front investment, and then use the profits you generate to reinvest in your business and grow your inventory.
However, there may come a time when you need more financial support to help grow your business. That’s where funding, financing, and loans come in – because with a larger amount of capital to start, you’ll be able to take advantage of “economies of scale” and hire employees (or outsource) to help expand your business.
You’ll also be able to kickstart marketing and advertising to get your products in front of more customers, along with having the financial resources to weather any bumps in the road and keep your business running smoothly. While it’s possible to launch an Amazon FBA business with a limited amount of capital… having a large amount of funds will give you a significant advantage.
Improve cash flow
When you have more cash coming in than going out, it gives you the ability to grow your business more efficiently without running out of capital. This can be a huge advantage – especially if you’re just starting out or trying to expand your FBA store. With more cash on hand, you’ll be able to invest in new inventory, hire additional employees, or even outsource to Amazon growth services. And because financing helps you avoid constantly worrying about where your next dollar is coming from… you’ll be able to focus more on high-leverage moves to scale your business.
When you have strong cash flow, you can also increase your marketing budget to generate more sales – or launch a new set of products without having to worry about where capital will come from. In addition, good cash flow gives you the flexibility to invest in SEO and other long-term growth strategies. So if you’re looking to take your Amazon FBA business to the next level, consider financing or seeking a loan to cover positive cash flow.
Accelerate your growth
With loans and financing opening up more opportunities to invest in your operation, the business can grow at a much faster pace. This type of funding can also provide stability for the business during tough economic times or periods of slow growth. By having a loan or line of credit, the business can continue to operate even if sales are down. This can help the business avoid lay-offs or other cost-cutting measures that could hurt the long-term potential of the company.
Some of the key benefits of securing funding, financing, or a loan for your Amazon FBA business include the ability to place larger inventory orders to improve profit margins, invest in higher rankings for your listings, and optimize your supply chain. In addition, having a reliable source of funding can help to ease “cold periods” that naturally occur – and provide peace of mind in times of struggle. Whether you’re looking to take your business to the next level or simply want to be prepared for surprise expenses… securing more capital can be a wise decision for any FBA seller who isn’t sitting on large amounts of funds.
Funding increased demand
There will always be times when your product(s) see an increase in demand – especially during holidays and seasonal periods. Almost every product experiences this phenomenon at some point during the year.
Beyond naturally-occurring increases in demand… you may also want to finance if you have plans to scale up your marketing and advertising efforts. Amazon has the world’s largest customer base – and there’s incredible search volume for thousands of products in their search engine, which makes their PPC program an effective way to ramp up sales. In fact, it’s as simple as targeting new keywords, testing out new products, or simply increasing the budget on a PPC campaign.
In order to fulfill this new demand, the extra capital from a loan or financing program might come in handy.
Adding more products
One of the benefits of Amazon FBA is the ability to expand your product line and reach more customers. With funding, you can source products from suppliers in bulk, which can save you money. You can also test out new products to see if they are a good fit for your business.
If you’re expanding to different customers, you may need to take out a loan to cover the costs of inventory and shipping. However, the potential rewards of reaching a wider audience make it worth considering funding options for your Amazon FBA business.
Keep in mind – while selling on Amazon, you aren’t necessarily restricted to your “brand” so to speak. This means FBA sellers will often source products in many different niches and categories (knowing they aren’t restricted to staying within a certain product line). In other words… you can always expand horizontally out to many different product categories – and financing can help you achieve that. With a little planning and financial savvy, you can take your business to the next level.
Scaling paid advertising
Paid advertising offers huge upside for reaching new customers and driving sales, but it can be expensive. Having the extra capital from funding or a loan can help you scale your marketing efforts and grow your business much faster than relying on ranking your products organically. Plus, you may be able to get better terms on financing or a loan if you use the funds specifically for marketing and advertising purposes.
Advertising efforts may create small losses during initial stages – so having additional capital from financing can help you weather those small losses and continue to grow your business. Then, once you overcome the losses and turn a profit with better reviews, ad optimization and greater LTV (customer lifetime value), you’ll be able to generate net gains and pay back the financing plus interest. So if you’re looking for ways to grow your Amazon FBA business, securing additional capital through funding, financing, or a loan can be a great option.
Amazon funding options
Amazon Lending Program
Amazon Lending is a program that offers short-term business loans to qualified sellers – so they can finance additional inventory and expand their market reach. Amazon lenders are typically VCs and banks (including banks that specialize in investment and commercial funds). The interest rates on these loans are typically lower than those offered by traditional financial institutions – making them an appealing option for small businesses.
In addition, the terms of the loan are flexible, and repayment can be made through a percentage of future sales. This makes Amazon Lending an attractive option for businesses that may not qualify for traditional financing.
Amazon does not require any of the traditional requirements like bank statements or annual revenue or tax returns – and they don’t check your credit score. Once again, this makes it a great option for FBA sellers who may not qualify for a traditional loan.
The interest rates are also very competitive, making it a solid alternative for businesses that are looking to grow. There are no hidden fees or early repayment penalties, so you can be sure that you are getting a fair deal. Overall, Amazon Lending is a great option for businesses that are looking to grow and expand.
Amazon Line of Credit
For some FBA sellers, Amazon Lending might not be the best opportunity for you – and even if you are approved, the terms can be inflexible or the cash offer might be low. That’s where the Amazon Line of Credit program comes in.
This program provides small businesses with the ability to request funds when they need them, up to a maximum limit. And because it’s a line of credit, you only pay interest on the funds that you actually use. This makes it a much more flexible and affordable option than Amazon Lending or a traditional loan.
Amazon verifies eligibility by checking your merchant data and sales history, so you can be certain that you’re getting the funds you need. The program is also very flexible, so you can use the funds for any purpose to grow and scale the business. Whether you’re looking to purchase inventory or expand your operations, Amazon’s Line of Credit program can help. Plus, it’s a great way to avoid interest rates on your purchases.
By making regular payments, you can build up your credit limit and avoid paying interest on your balance. There is no interest charged on the credit line, and the monthly payments are automatically deducted from the seller’s Amazon account balance. To be eligible for the program, sellers must have an active Amazon seller account in good standing. For more details on the Line of Credit program, head to your Seller Central dashboard.
Merchant Cash Advance
A Merchant Cash Advance (MCA) is an alternative financing option for Amazon FBA businesses. An MCA is not a loan, but rather an advance of funds based on future sales. This means that repayment is not fixed, but rather fluctuates with sales volume. For FBA sellers, an MCA can be a flexible and affordable way to finance inventory, marketing, or other growth initiatives.
Unlike a traditional loan, there is no need to put up collateral, and funds can be accessed quickly. An MCA can also be a good option for businesses that may not qualify for a traditional loan due to poor credit or lack of collateral.
For Amazon business owners who are short on time, applying for a merchant cash advance is quick and simple. The entire process can be completed in just a few minutes, and you could get the money you need as soon as the next day or two.
Also, since it’s not a loan, there’s no need to worry about collateral or interest rates. This can free up your time so that you can focus on growing your business. So if you are looking for a way to receive extra funding without all the hassle, a Merchant Cash Advance may be the right option for you.
Another way to offset the costs and launching & growing an Amazon business is to use crowdfunding. By creating a campaign on a platform like Kickstarter or Indiegogo, sellers can pre-sell products, raise awareness for their brand, and build an engaged community of backers (keep in mind – this only applies to unique products, unlike many items sourced from Alibaba and sold by multiple sellers on Amazon).
Crowdfunding can also help sellers to gauge customer interest in their product and get feedback on their business idea – instead of attempting to manufacture large amounts of units and potentially wasting money on a failed idea. For Amazon sellers, crowdfunding can be a powerful tool for getting started and driving sales.
Banks & traditional loan providers
Banks are a popular choice for financing an Amazon business because they typically offer lower interest rates and longer repayment terms. This makes them a good option for businesses with strong credit. When you’re considering a bank for financing, be sure to shop around for the best offers and terms available to you.
In addition, banks are often more willing to work with businesses that are just starting out, as they can provide valuable advice and guidance. However, it is important to remember that taking out a loan from a bank is a big commitment, and businesses should be sure that they can make the payments on time before signing any agreements.
You may also want to consider a traditional loan provider, which may be more willing to work with businesses that have less-than-perfect credit. Regardless of which option you choose, be sure to compare interest rates, repayment terms, and other important factors before making your decision. With a little effort, you should be able to obtain the financing you need to get your Amazon business off the ground.
Private retail funding services
No matter what stage your Amazon business is in, retail funding can help you acquire the financing and loans you need to grow. Private retail funding services work with a wide range of lenders to provide you with competitive rates and terms. Whether you’re looking for working capital to stock up on inventory or need a long-term loan to expand your business, private retail funding services can help you find the right solution.
In addition, they can also help you restructure your debt – making it more manageable and easier to pay off. In addition, they can help improve and strengthen your cash flow by providing you with additional funding that can be used to cover expenses. Private retail funding services can be a great way to get back on track financially. Speak to a financial advisor today to see if private retail funding services are right for you. With the right opportunity, you can get the financing you need to take your Amazon business to the next level.
Final thoughts on Amazon FBA funding, financing & loans
Arguably the biggest challenge with growing an ecommerce business is managing cash flow. It’s a constant game of “money in, money out” with generating sales and spending on inventory + marketing.
Funding your business with loans & other forms of financing can provide the much-needed stability to grow your business – without running out of cash after a large inventory purchase and waiting for shipments to arrive at Amazon. If you can secure ideal terms on financing… you might be in a position to grow your Amazon store faster than expected.