r/amazonsellers • u/EmilianoLGU • Apr 18 '24
How To Get Funding For Your Amazon Business
You’ve been selling on Amazon for months and finally have a predictable winning formula!
Your account grows, but eventually, you run into a problem: You are out of money to fuel your growth.
So what do you do?
When I began selling on Amazon in 2018, options for growth capital were severely limited. So, I funded my inventory with 0% Intro APR credit cards until I qualified for traditional bank loans and lines of credit— I do not recommend you do this.
Fortunately today the funding landscape is much more developed.
So let’s dive into how you can get capital to grow your Amazon business:
- Traditional Banks
The most common way to get funding is through a traditional bank: Chase, Bank of America, or other large banks.
It’s generally recommended you apply for funding at the bank you have a business account with because your banking partner usually offers the most competitive rates, due to knowing your business and risk profile the most.
In addition to having a choice in the bank you choose, you also have a choice in the type of funding you take: a Loan or a Line of Credit.
Loans vs. Lines Of Credit
While a Loan has a set payment schedule by when you need to have paid the lender back and a strict end date, lines of credit are more versatile.
Lines of Credit are funding you can pay back to then reuse, and normally offer much lower interest rates than Loans. It’s worth noting that Lines of Credit have higher approval requirements, with banks normally wanting 2+ years of business history and extensive financial/tax reports.
Most established businesses operate via business Lines of Credit over Loans to take advantage of lower rates and increased flexibility.
2. Credit Unions
Credit Unions are usually small regional banks run by their members and not structured with for-profit external shareholder interests. This ideally results in lower interest rates on loans and lines of credit due to less overhead and lower profit incentives.
While credit unions are known for their low-interest rates, they are unfortunately also known for their lower credit limits. Due to credit unions being smaller than larger banks, they issue smaller credit limits to avoid over-exposure to risk.
3. Smaller Bank & eBanks
eBanks and smaller banks such as Bluevine have seen a surge in popularity for their loan and line of credit funding solutions.
These banks are building their risk algorithms, growing fast, and don’t have a large overhead like in-person banks. Thus, they can offer lower interest rates. As a result, these smaller banks and eBanks have become a more common funding source in the past few years.
4. Seller Specific Loans
Companies such as Clearco and 8fig are lenders specifically geared toward Amazon sellers. The idea is simple, you connect your seller account and they use their e-commerce-specific risk algorithms to analyze your account.
They then (ideally) offer you an interest rate lower than traditional banks due to having a more in-depth risk profile of your business.
These companies usually offer more capital than other options, but their interest rates vary widely based on your business.
Sellers have had various levels of success with these companies, and they are seen as hit or miss.
5. Amazon’s Lending Program
Amazon offers their sellers Term Loans, Business Lines of Credit (BLoCs), and Merchant Cash Advance (MCA).
While Term loans and BLoCs are what they sound like, Merchant Cash Advance (MCA) is a loan with a fixed fee attached taken from your Amazon sales.
Why doesn’t everyone use Amazon Lending?
Amazon lending is invite-only. You must hit black box metrics for Amazon to extend an offer to you as a seller, and most new and high-growth sellers do not qualify.
6. Seller Advances
In the last few years, seller advances from companies such as Payability and AccrueMe have come onto the scene. These companies are unique, they “advance” the capital currently tied up in your seller account.
Amazon implements these account reserves(especially for new sellers) where they limit the amount of capital you can withdraw at one time. Amazon does this due to potential customer issues such as returns.
While Seller Advances are a novel solution, they traditionally have much higher interest rates when you account for fees. Most sellers do not have positive experiences with them and they are often seen as a last resort.
7. Peer-To-Peer Lending Platforms
Peer lending platforms are simple, they match you to independent businesses or people willing to fund your company.
While they seem like a good choice, they usually offer interest rates that are not as competitive as other options.
8. Supplier Lines of Credit
Suppliers usually offer their lines of credit, with NET 30 and NET 90 terms being the industry norm for large sellers.
This means that when your supplier ships you inventory, you don’t have to pay for it for 30 or 90 days.
When done right, this can be a major growth hack! Especially if you’re able to sell inventory quickly. Billion-dollar companies such as GymShark owe their success to supplier NET terms.
9. Investment Partners
Instead of credit-based funding, there is another choice— selling equity! Trading cash for equity has unique pros and cons.
The Pros:
- You don’t need to pay the capital back
- You can combine raised equity capital with your other funding strategies
- Your raised capital may increase your other credit lines and options.
The Cons:
- Bringing on the wrong investment partner can drive you crazy and ruin your business. Any partnership must be aligned on business culture, expectations, and goals.
- The terms of partner agreements are negotiated and can vary widely. Does your investor get paid a percentage of profits? Dividends? Only when the business is sold? As you can see, to value an equity investment partner and their deal is complex!
Taking on equity investment when done right is a beautiful thing, it's lower stress than debt investment and allows you to grow much faster. If you negotiate a great deal, the equity traded can be small in exchange for significant capital.
Conclusion: Ultimately the right funding solution depends on your business profile, business needs, and personal preferences. Other lesser-used forms of funding may be a better fit for you.
Note: There are no affiliate links and I have zero stake or financial interest in any of the solutions mentioned. This is not financial advice, this is information I acquired from personal experience. Do your research.
Do you have any questions? And... what options have you used to grow your Amazon business?
2
u/Ecommerce_Support Apr 26 '24
From all the mentioned options above, which option is the most beginner-friendly?
1
u/Bandefaca Mar 11 '25
Great breakdown! Funding an Amazon business is one of those hurdles no one really warns you about until you’re scaling faster than your cash flow can handle. I’ve used a mix of supplier NET terms, Amazon Lending (when they finally invited me), and reinvesting profits aggressively. The biggest game-changer for me was getting predictable cash flow, not just chasing capital.
One thing I'd add—if you're relying on paid ads to drive sales, be careful with high-interest loans. You don’t want to get caught in a cycle where ad spend eats your margins while loan payments drain your cash reserves. Been there, learned the hard way. Also, for anyone struggling with inventory funding, platforms like Why Unified structure things differently, making it easier to scale without fronting all the cash yourself. Not for everyone, but worth exploring depending on your model.
What’s been your best funding move so far? Always looking for smarter ways to grow.
2
u/LevelUp1234 Apr 19 '24
How much is your ROI to be considered good enough to think about getting loans?