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Is Amazon Lending to Small Businesses?

Nigel Graber
small business owners, man & woman seller check product order, packing goods for delivery.|man and woman small business owners check product order for delivery.

Your experience of Amazon might be solely as a customer. After all, the online e-tailer is a place where you can buy everything from garden gnomes to gorilla costumes.But there’s another side to the highly lucrative coin. For every buyer, there’s a seller, and Amazon has been supporting small businesses for many years – around one million of them, in fact. According to Small Business Trends, 60% of small Internet businesses receive more than 50% of their online sales from sites like Amazon.

Amazon small-business opportunities

Amazon has always offered great opportunities for small UK businesses. In 2017, British businesses enjoyed a record-breaking year on Amazon, achieving sales of £2.3bn. Amazon shines a spotlight on small business, allowing even tiny startups to reach a huge audience, so the figures — up from 2016’s record of £1.8bn — aren’t too surprising. That’s a decent response to anyone who claims that Amazon and other e-commerce businesses are responsible for the decline of the British high street.

For the last few years, the company’s small-business program has helped position Amazon as an ally of independent sellers. That means giving smaller businesses access to international markets.Thanks to Amazon, UK businesses can trade without worrying about language barriers and can offer global delivery and distribution, plus customer service in local languages. Around 60% of the UK businesses that trade on Amazon Marketplace are now exporting. And half of all the sales on Amazon's global sites stem from smaller, independent businesses.

Expanding business beyond traditional borders

One such business is Sugru, a London start-up manufacturing a mouldable glue aimed at fixing everyday household items.Founder Jane Ni Dhulchaointigh said that Amazon sales are growing by over 100 percent each year.

"From launching our business in the UK, we’ve now expanded to sell through Amazon across seven countries, and now Amazon in the US is our single largest customer.“With more than two million customers globally, we look forward to boosting our export sales even further in 2017."

Henry Croft, a research analyst at Accendo Markets, said, "This signals the breaking down of borders for retail. Traditionally, consumers abroad would look towards their domestic market to procure goods.

“With the rise of Amazon, these markets are now open to the UK retailer as well as domestic producers, although alongside the positives comes the obvious negative: this works both ways, and the UK Amazon seller will have to compete with like-minded individuals across the world to capture sales.”

Amazon small-business credit card – what you need to know

But the benefits of Amazon’s small-business program don’t stop there. The e-tail giant has also launched its own credit card. It allows cardholders to earn points they can redeem for Amazon gift cards.The Amazon Platinum card is not business-specific, but it can help companies with their business spending.Amazon’s small-business credit card comes with a free gift card. And a recent analysis by consumer site Money Saving Expert suggests it’s one of the market’s best cards for cashback, provided you limit your spending to Amazon. If you keep your spending below about £5000, after year one it can even beat American Express, traditionally seen as the cashback king.

Reward points

As well as the £10 Amazon gift card, loaded when you activate the card, you’ll also enjoy reward points on all your spending. These come at a rate of 0.75 points per £1 spent at Amazon, or 0.5 points for every pound spent anywhere else.Amazon’s small-business card differs from other cards, in that you earn points on every penny you spend. And those points get rounded up to two decimal places each day. Collect 1000 and you’ll have earned yourself a nice £10 Amazon gift card, which they’ll add to your Amazon account within two working days of issuing your statement.

man and woman small business owners, who got a loan from Amazon Lending, check product order for delivery.

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Is Amazon Lending to small businesses?

As well as providing a shopfront for startups to find their place in the world, Amazon is also offering loans to businesses.It all began in the US in 2012, with the launch of Amazon Lending. The offshoot provides loans for resident businesses from $1,000 to $750,000 for up to 12 months, with rates ranging from 6% to 17%.The catch is that Amazon Lending is by invitation only. To get an invite, the company recommends that you maintain good customer metrics and a northbound sales curve.


Those metrics encompass cancellation and order-defect rates, policy violations and speed of response to customers. Amazon sellers report that they got their first offer after about a year of selling on the site.Amazon automatically withdraws repayments from your seller account each month. If you don’t keep up with repayments, It can also confiscate any inventory it stores for you or withholds payments from your seller account.Amazon Lending is unique because the company decides if you’re a good fit for the program before they make their offer. This lends the program an air of exclusivity and it also means that you get your finance quicker than with a traditional lender. But note that approval doesn't go to everyone.

Decisions in minutes

Some approved customers have reported getting a decision in minutes and their money on the same day. In contrast, other online vendors could take several days to complete the same process.

Amazon Marketplace vice president Peeyush Nahar said: “We created Amazon Lending to make it simple for up-and-coming small businesses to efficiently get a business loan because we know that an infusion of capital at the right moment can put a small business on the path to even greater success.“Amazon is providing capital to small businesses to help them expand inventory and operations at a critical period of their growth. We understand that a small loan can go a long way.”

What are the benefits of Amazon Lending?

  • Fast approval: Amazon already has your personal data, so approval decisions are fast
  • A range of amounts: Borrow from $1000 to $750,000 depending on your business
  • Less focus on credit score: Credit ratings are key with other lenders but, with Amazon, eligibility requirements revolve around customer metrics and sales
  • Get money that day: Approval could happen with an hour and the money available that day
  • Easy second loans: 50% of all lenders report being able to secure a second loan

Amazon UK Lending

Amazon Lending was expanded to the UK in 2015, as well as Canada, China, France, Germany, India, Italy and Spain.As with the US offering, the loans are on an invite-only basis, so it is not open to every Amazon seller. The three-to-six-month loans range from $1,000 (£635) to $600,000 (£381,000) and are aimed at helping merchants buy inventory.The e-tail giant makes money from the scheme on interest as well as taking a cut of all sales on its marketplace. Amazon claims to have offered over $3bn in loans, while over half its sellers have signed up for a repeat loan.In 2017, Amazon ramped up its lending to small businesses in a bid to directly challenge the big banks that have traditionally dominated the finance scene.After a year in which it loaned around $1bn, Amazon decided to expand its offers to even more of the two million businesses that use its online platform.

The rise of FinTech

A new PricewaterhouseCoopers (PwC) report, Redrawing the Lines: FinTech’s Growing Influence on Financial Services, states that 61% of financial industry leaders in the UK are worried they could lose up to 40% of their revenue to standalone FinTech firms and e-tailers such as Amazon.That’s led to around half of UK firms to declare they’re planning FinTech acquisitions over the coming years. In addition, more eighty percent say they’re aiming to set up strategic partnerships with FinTechs in the next five years.

The launch of Amazon Business

The online retail giant launched Amazon Business in 2017, which aims to serve the procurement needs of small-business owners. The move follows figures that show that trade customers account for 40 percent of all Amazon sales.With this in mind, Amazon announced more investment in office supplies and industrial tools. All with a view to mirroring the traditional bricks-and-mortar trade counter.

“Whether you are a sole trader, a buyer in a mid-size company or a chief procurement officer in a large multi-national organisation, Amazon Business has the products and capabilities to serve your needs,” said Bill Burkland, head of Amazon Business UK.

The package offers VAT pricing and invoicing, plus the ability to add purchase order (PO) numbers. Detailed analytics will offer users more control over their orders. Plus, Amazon Business is easily integrated into several e-procurement systems.The scheme has been running in the US since 2015 and generated over $1bn in sales in its first year from over 400,000 businesses. The first four months of operation in Germany alone saw more than 50,000 businesses sign up.It’s a lucrative market. Data from the Office for National Statistics (ONS) suggests it was worth £96.5bn in 2015.Amazon Business is yet another strategic move from Amazon to carve a niche in the UK small-business market. In 2016, the firm gained approval to bring Prime Air to the UK – using drones to deliver goods around the country. Later the same year, it expanded Prime Now, an ultra-fast courier service for a select few London retailers.

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