The decision to either accept the Amazon financing offer or to let it go might be a difficult one once a seller’s faces the situation. To help you decide, here’s a comparison between the advantages and disadvantages of the loan program.
The Pros of It
Easy Application Process
For a conventional business loan, a person has to collect a bunch of documents before he could move on with the financing. These include everything from credit reports to balance and profit and loss statistics, bank statements and so much more. All of this private information can take a lot of time and hard work while no certainty of a definite answer. When it comes to business loans for Amazon sellers, the application process is quite simple. Since, Amazon already has pretty much all the details about your business at the website, all you need is an invitation to either accept or reject it or adjust it however you want.
Borrow More at Lesser Interest
With Amazon’s financing program, you can borrow an amount as minimal as $1000 to something as huge as 750,000 with the interest rate going as high as 16% accompanied with a 12 month term. This can have a significant influence at your inventory but it all depends on the seller’s performance.
The Cons of It
Restricted to The Use
Amazon’s funds are extremely limited and can be used for nothing else but expansion of inventory. So if that’s not your top-most priority, think again before you apply.
When it comes to paying off the loan, the course is decided by Amazon beforehand too. Amazon deducts a fixed amount from the seller’s account every month irrespective of their sales.
The Inventory Might Suffer It All
In case a seller is unable to pay off the loan, Amazon is rightful to seize their inventory to make up for their loss or diverts the payment from the current payments to its own account rather than the payment going to the seller’s.