Selling on Amazon can be lucrative as the online store receives over two billion monthly visits. Fortunately, you don’t need to invest heavily to start a store, but at one time or another, you may require more capital to scale and grow your business. If this is the case for your business, Amazon Lending can come in handy. But does the program report to credit bureaus? Read on to learn about this and more.
What Is Amazon Lending?
Amazon Loaning is an invite-only program that provides businesses with convenient lending solutions.
Online sellers often have no access to bank loans. It’s not to say they don’t acknowledge online stores as legit businesses. It’s just that the online sector presents challenges they don’t understand.
Through Amazon Lenders, sellers can access loans and credit lines to scale their business with advertising, improved product offerings, or restocking. And of the many funding options available, Amazon Loaning offers better terms, as we’ll discuss below. It’s a finance product no seller wants to miss out on.
Does Amazon Lending Report to Credit Bureaus?
No, it doesn’t. The financing Amazon Lending provides is not technically a loan. It won’t help build your credit score as the loan is not reported to the credit bureau.
However, reporting to the credit bureau plays a significant role in recovering unpaid debts. So, if you’re wondering how Amazon would go about it if a seller failed to make a payment, they use the inventory as collateral. They would sell it to recover the money owed.
How Amazon Lending Compares to Other Options
Besides not reporting to the credit bureau, below are additional ways Amazon differs from other lenders:
1. Less Paperwork
Amazon loaning has fewer paperwork requirements. Why? Eligibility is based on sales performance and customer service reviews, not documents showing proof of finances and other requirements.
2. Requires No Credit Score
Amazon Lending does not require that you have a credit score. Again, that’s because what qualifies a seller is their performance on Amazon.
3. Competitive Interest Rates
Amazon Lender interest rates are lower than other lenders. Taking the seller’s inventory as collateral is one reason Amazon can afford lower interest rates.
Typical lenders would not know how to go about liquidating an inventory. Therefore, it’s not of much value to them. But to Amazon, the collateral holds much weight as they can quickly sell it to recover unpaid debts.
4. Fast Approval
With banks and other financial institutions, loan approval can lag for days, even weeks. But Amazon can take 24 hours to approve, after which your funds can instantly reflect in your seller account.
5. No Prepayment
Lending charges interest accrued solely on the borrowed amount. Paying your loan back early means the total loan cost goes even lower.
6. No Origination Fees
Typical financing instructions charge various fees, such as application, origination, and closing.
Amazon loaning charges no such fees, providing much better offer terms.
Frequently Asked Questions
The following are some frequently asked questions about Amazon Lending and Reporting to Credit Bureaus:
1. How to Qualify for Amazon Lending
As mentioned earlier, Amazon invites you to the program. Still, you’re more likely to qualify if you check the following:
● An active seller account with growing sales registered in a qualifying state or country.
● No trademark infringement complaints or copyright claims
● Sales amounting to 10,000
● Your listing complies with Amazon policy
● No serious negative reviews
2. What Are the Disadvantages
Although you don’t need a credit score to qualify for Amazon grant, and it doesn’t affect your credit score, there are some disadvantages, including:
● Funds get deducted automatically from your Amazon account
● Amazon regulates how you can spend the funds
● You can’t apply for Amazon loan. You have to wait to get invited
3. How Does an Amazon Lending Work
Amazon credit bases eligibility on product performance in the market. There’s minimal paperwork involved as Amazon has most of the information, they need to determine how much you can borrow then you receive a notification.
Get Started with Amazon Lending
Amazon Lending is convenient: simple application process, fast approval, and flexible. And although it’s not available to everyone, as mentioned earlier, it’s possible to increase your chances of qualifying. Go to your Sellers Central homepage to check if you qualify for funding and take advantage of their product offerings to scale your business.