Long gone are the days when it felt impossible to find funding for Amazon Sellers. As individual Amazon stores have rapidly become more lucrative and established strong reputations, the channels through which sellers can find funding have also expanded. Now, the question is, which of the funding solutions for Amazon Sellers makes the most sense for your business?
While bootstrapping is popular among many sellers, it isn’t always feasible or financially viable. Instead, many sellers are opting to use funding platforms that range from traditional to modern, short-term cash flow solutions to long-term capital investments, and more. With such a wide range of avenues for funding for Amazon Sellers, it can be difficult to determine which makes the most sense for your business.
In this blog, we will explore the pros and cons of four popular funding solutions for Amazon Sellers to help you decide which will serve your business best.
Part of Amazon’s great appeal and success has come from its unique accessibility to sellers of all backgrounds. While plenty of sellers have a history in entrepreneurship, just as many, if not more, began selling on Amazon without ever being involved in a business. For sellers just starting on Amazon, one of the biggest challenges is finding the working capital to purchase inventory. If you have little to no business history and minimal cash saved for inventory, credit cards may be a good option to start funding your business.
Perhaps the biggest advantage of using a credit card as funding for Amazon Sellers is its convenience. Not only is obtaining a credit card quick and easy, allowing you to get your business up and running faster, but using a credit card to purchase inventory is secure and efficient. Rather than waiting for funds to be deposited in your bank account from transfers or checks, credit cards give you access to funds immediately. Credit cards also may present advantages as funding for Amazon Sellers if they offer reward points or cash-back bonuses that can be used toward future business expenses.
Credit cards may seem like a great choice in funding for Amazon Sellers, however, it’s important to also be aware of their shortcomings. Carrying a balance on credit cards will rapidly become very expensive. Additionally, if you are using a personal card, rather than a business card, it can potentially hurt your credit score and finances. Finally, credit cards typically come with a credit limit which puts a ceiling on the amount of inventory you can buy at one time.
Amazon Lending and Cash Advance
If you’ve been selling for a little while and have established your business, you most likely have access to Amazon lending options and merchant cash advances, which allows sellers to receive a loan to cover upcoming costs. Cash from these advances can be used to purchase inventory, scale marketing, and advertising expenses, or pay for a wide variety of other necessary expenses that come with running an Amazon store.
By taking capital from Amazon, you’ll be using funding for Amazon Sellers designed for convenience in the platform. Applications for Amazon lending and merchant cash advances are easily accessible in your Seller Central account.
Although the convenience of Amazon Lending is nice, it doesn’t always outweigh alternative offers. Funding solutions for Amazon Sellers through the platform is often more expensive and can carry a higher APR than other options. Repayments also come directly from your business checking account, so if it’s common for your business to have slim margins this may put you at risk of an overdraft.
Traditional Banking Loans
If you’re an experienced seller, you might qualify for a traditional bank loan to fund your Amazon growth. Banks offer a wide range of loan options, each coming with different terms and conditions that can be complicated and confusing. The sheer amount of loan options available as funding for Amazon Sellers can make the decision process difficult and overwhelming, but if you’re using a traditional bank it’s still critical to understand the pros and cons of each.
One of the primary advantages of using a banking loan as your funding solutions for Amazon Sellers is the low-interest rates. These rates can be beneficial in the long run to make your total amount to pay back cheaper. Many banks also provide flexible repayment schedules that can work with the needs of your business, as well as offer supplemental funds, should the need for them arise.
Banking loans, however, are difficult for many Amazon sellers to qualify for due to their rigid underwriting process. If you’re new to Amazon or have ever struggled with sales, traditional banking loans can be difficult to obtain as funding for Amazon Sellers. Typically, it takes a substantial record of sales and sometimes even established success outside of the Amazon marketplace to qualify for a bank loan.
Connect with Viably Today
One of the most important factors in choosing funding for Amazon Sellers is finding a provider that truly understands the challenges of your business, and can offer products that will help your business grow.
Viably is a unique platform designed to provide funding solutions for Amazon Sellers. Created by and for ecommerce businesses, Viably integrates funding, forecasting, and banking all into one tool making it easy for you to truly visualize your cash flow at any stage of the process. Additionally, Viably customers have unique advantages, like virtual credit cards, thanks to Viably’s multifunctional nature.
Thanks to marketplace connection, Viably can review your business data and make a tailored funding offer rapidly. Once you’ve accepted an offer that working capital will be deposited into your bank account within 24 hours, meaning that you can get back to focusing on your business quickly.
Connect your accounts today to find out how much funding your business could receive.