Every successful business has the right financial backings. Are you about to start your Amazon business, or, maybe, you want to expand your reach? You’ll need strong financial backing. Sometimes, you may need to get a loan to have the financial strength to bring your Amazon dream to pass.
In this article, you’ll learn what a loan is, the things you need to check before going for a loan, and how to get loans for your Amazon business.
What Does A Loan Mean To An Amazon Seller?
Every business needs working capital to pull through the thick, highly competitive eCommerce arena and survive. A loan is a type of working capital that you can have access to. A loan is a lump sum that you get for your business to be paid back over a specified period, usually with fixed interest on it.
Usually, you can have access to loans from banks. However, most banks are cautious of loaning cash to businesses just starting out, especially eCommerce businesses that may initially have zero collateral. There are other means of getting a loan for your Amazon business. But, before you go ahead and apply for that loan, you need to be sure your house is intact by checking the following.
Do You Know Your Business Enough?
It’s also essential to know and understand all the intricacies of your business before you go ahead and request Amazon sellers funding through loans. You must have a firm handle of your business cash flow; you should know your average income and expenses, and what expenses take the lion’s share of your cash flow. That way, you can make adequate plans for it.
Here are ways to get a loan for Amazon business:
1. Be Sincere And Specific About What You Want
Before you apply for a loan, you should have the targeted and specific goals you want to use the loan for. It’d be probably better if such goals are well-written and documented. This will help you spend the loan on the right goals and not misappropriate it. You should also clarify if you truly need a loan, how soon you need it, and how long it’ll take to pay back with interest.
Now that you have checked if you could take a loan for your business and concluded on getting a loan, you don’t need to bother about banks rejecting your loan application. There are other options to get a loan for your amazon business successfully. These include:
2. Peer-To-Peer Loans
For peer-to-peer loans, you need a good credit history to be eligible. However, with your credit history, you stand a chance of getting a loan on a peer-to-peer site. How to go about it? Search for a peer-to-peer loaning site, post how much you’d love to be loaned, and equally post how much you’d pay as the interest. The lenders will bid on the loan, and, of course, the highest bidder will give you the loan you need.
3. The Merchant Cash Advance
Merchant cash advance gives you a loan to be paid back later with your credit card sales in the future. This type of loaning system has no particular interest rate to be paid. It just takes a certain agreed percentage from your daily credit card sales. The percentage deducted from your credit card sales depends on how much you borrowed from your lender. This could be an affordable loan, and it could equally be an expensive loan, depending on how much you borrowed and what your terms of the agreement are.
4. Factoring
This is another way to get a loan for your Amazon business. Factoring simply means selling your accounts receivables to get loans. Its interest rate is usually higher than in traditional banks, but it’s easier to access.
5. Amazon Loan Lending
Amazon loan lending is a program created by Amazon itself to loan cash to its sellers. With this, Amazon sellers can have access to a working capital that can fast track their business growth. The interest on this type of business loan is usually lower than what credit card loans will take. Also, of course, the amount that can be released as a loan is also lower than what your credit card can offer. The only thing is that you have to be selected and invited by Amazon to be eligible for the loan application. What determines if you qualify for the invitation is solely based on your online sales record.
6. Credit Cards
A credit card is another means to access loans for your Amazon business. However, due to the high-interest rate that could be accumulated, it’s not the best for a long-term loan. Nonetheless, if you need quick cash for a short period, you can make use of your credit card. You could ensure your rate doesn’t go up by paying back the loan in good time. You could also negotiate with credit card companies for lower interest rates.
Conclusion
Getting a loan for your Amazon business isn’t difficult if you have your house in order by clarifying why you need a loan, how much you need, and when you’ll pay it back. If you insist on getting loans from banks, you may find the process difficult. However, if you explore other alternatives highlighted above, you may have access to your loan easily.
