After a sluggish year of growth in 2017, a fresh deal seeks to breathe a new lease of life into the Amazon Lending scheme. Amazon Lending is the invitation only scheme that offers credit to merchants selling on the marketplace with rates and credit levels based on their marketplace sales performance.
The total lent in 2017 grew only slightly over the course of the year having almost doubled in 2016. And now Amazon has partnered with the Bank of America Merrill Lynch to provide loans to merchants in the same manner but whilst minimising the company’s exposure to the credit risk.
Amazon Lending makes loans of $1,000 to $750,000 in the US (the service is also available in the UK and Europe), with loan terms of up to a year, for companies that often find it hard to find lines of credit elsewhere. In June 2017, Amazon said it had made loans of more than $1 billion during the previous 12-month period. That showed great growth because total combined loans were $1.5 billion for the four years prior to that.
But growth in lending slowed in 2017. Having lent $661 million in 2016, last year they offered $692 million to Amazon merchants. But why the slowdown? There are several possible reasons.
Firstly, being a large lender brings with it risks and Amazon isn’t necessarily well equipped to shoulder those challenges. A bank, with greater expertise, is probably better placed. And even Amazon has finite resources at its disposal, so capital may well be better directed at other expansion plans.
And, as some sellers on Tamebay have previously pointed out, whilst any new line of credit is welcome and sometimes hard to come by, Amazon Lending didn’t always offer the best terms with interest rates typically clocking in at 6 – 14% depending your standing as a merchant.
Amazon has largely remained tight lipped about Amazon Lending and doesn’t even have a landing page about the scheme. Rather merchants see what they can borrow in the Seller Central console. But this deal does suggest they want to keep it going and, perhaps, make more loans.
Have you ever used Amazon Lending and what was your experience?