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Amazon offering its sellers loans for holiday inventory

updated 11:41 pm EDT, Thu September 27, 2012

Up to $800,000, 13 percent interest

Amazon has started offering funding to businesses selling on its marketplace, a move that could increase sales for both Amazon and the partners, while at the same time exposing it to possible credit default risks. The new program titled "Amazon Lending" has sent emails to sellers offering loans from Amazon Capital Services, offering up to $800,000 to some sellers, and charging interest rates between one and 13 percent.

"Some of these businesses are only constrained by cash flow," said Scot Wingo, chief executive of e-commerce advisory firm ChannelAdvisor. He added that "These spot loans will help these folks grow by getting them extra cash to buy more product."

Amazon is judging creditworthiness and loan amounts based on performance on its marketplace. The money can only be used to buy more inventory and increase sales just on Amazon.com, according to the email. Sellers can sign up for loans through Amazon merchant accounts, and if approved, the money is deposited in the sellers' accounts within five business days. Monthly interest payments are deducted automatically from the Amazon seller accounts.

Electronista has contacted Amazon for more details, including penalties to sellers that can't repay the loans, but no comment has been made.



By Electronista Staff
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