6 Funding Options for Online Sellers: Amazon Lending, Crowdfunding and More
We recently spoke about the pros and cons of using credit cards to fund your Amazon inventory. If you’re an Amazon seller there are multiple different ways in which you can fund both initial inventory costs and new inventory costs, and more ways which we have outlined below.
Regardless of how long you’ve been an Amazon seller, there’s a good chance that acquiring funding to pay for more inventory is far from your favorite part of running your business. You want to spend your time actually running your business; focusing on improving your products and growing your customer base, not financing.
With that said, before you dive into six funding options for online sellers outlined below, keep in mind your need for capital, the costs associated, and your measurable growth plan.
1: Borrow Money from Family and Friends
One option to fund your Amazon business is to borrow money from a family member or close friend. This option can be the fastest and cheapest route with no affect on your credit score.
Though some business owners thrive in an environment in which their business and personal life is entirely intertwined, things can get complicated and lead to damaged relationships.
But, if your friend or family is a seasoned entrepreneur, this could be an investment opportunity for them if your business takes off.
2: Small Business Loans
To be considered for a small business loan you’re going to likely need a credit score that’s over 700 and business years established along with financials, and you may need to bring along a detailed business plan (and be able to explain it with enthusiasm) to convince the lender that you’re a good bet. If you are offered a loan, make sure you’re aware of what the interest rate is, as these can sometimes be high.
Crowdfunding for online sellers can be an opportunity to secure sales ahead of manufacturing if you have a desirable Private Label product, an established brand and strong social media presence.
With stringent planning and all of the pieces in place for a successful crowdfunding campaign, your brand could benefit from the exposure and credibility that Kickstarter or Indiegogo can provide. On the other hand, there can be negative affects if you fail to fulfill orders on time or over promise.
4: Extending Credit Terms with Current Suppliers
A reasonable inventory funding option for Amazon sellers is to speak with your current suppliers to see if they would extent their credit terms to you, therefore allowing you to pay (for example) net 90 days instead of net 30.
Extending your credit terms could certainly have a positive effect on your cash flow but isn’t often a silver bullet. Your suppliers will take into account your relationship with them, previous payment history, order size, and their internal policies and experience. But, you don’t have a chance if you don’t ask, so it’s worth asking.
5: Amazon Lending
Amazon Lending is a loan for Amazon sellers that is repaid overtime with a portion of your Amazon sales. Amazon Lending is offered to certain marketplace sellers; you cannot apply for Amazon Lending nor can you change the loan amount. You can choose to accept or reject the loan offer. If you are offered an Amazon loan, the invitation will show up in your Seller Central dashboard; the process and repayment are fairly easy.
Payability works with sellers who use Amazon Lending. We work with clients to set aside a custom advance rate and options for loan repayment plan so it ties in with Payability account.
6: Instant Access to Funds with Payability
Payability is a modern update to the centuries-old invoice factoring; and designed specifically to advance payments for Amazon Sellers without a loan or credit card involved. Invoice factoring is a great way to provide much needed cash flow and Amazon financing. Unlike bank loans or other financing that looks at your past year of sales, Payability looks at your past Amazon sales history and seller health to qualify your business for invoice factoring.
With Payability, a financing solution for Amazon sellers, we make funding for your business easy by advancing payments to you based on the sales that you’ve already fulfilled on Amazon. You will then receive your Amazon payout daily instead of waiting 2 weeks. To find out more about Payability Instant Access, please contact us at firstname.lastname@example.org today.