Best Loan Options For Third Party Sellers
Selling on Amazon is a capital intensive venture, sellers typically need capital when they’re interested in adding new products to increase their revenues. However, they also need extra cash to help them get through difficult times like an economic slowdown.
Before you start looking for financing, there are some things you need to keep in mind. For starters, you should put yourself in the lender’s shoes. What are they looking for?
Here are some things you need to look at closely before applying for a business loan:
- Evaluate your credit score to match the best lenders for you
- Study your finances and cash flow
- Establish when do you need the loan?
- When can you pay back the loan?
We will now discuss some lenders that can help your Amazon business stay afloat. These are used by many Amazon top-sellers.
Clearbanc offers low-cost cash advances to LLC’s and corporations.
- If your company is not eligible, you should go with something else
- If you’re not interested in VC funding, this is great for your company
Clearbanc loan requirements
Your online business (Corporation or LLC) must generate at least $10,000 per month, and you must show six months of revenue.
Compared to other loan products, Clearbanc offers low rates for their cash advances. If you don’t want to give up a significant piece of your business to a venture capitalist, you should consider applying for a cash advance from Clearbanc. Their terms are flexible, and the quick cash flow can help your business grow.
Clearbanc’s services are only available to online businesses. This is a big plus when you consider the fact that your local bank or credit union may not give you the time of day.
We made several attempts at contacting Clearbanc’s customer service department. Unfortunately, we were unable to speak with someone.
What are Clearbanc Fees for the Cash Advance?
Clearbanc will give you a cash advance with a flat fee of 6% to 12.5%. You are required to repay the loan plus a fee with a percentage of your daily Amazon sales. This can range from 1% to 20%.
You will not be facing a repayment deadline. Your sales will determine the payoff date.
How does this Work?
Let’s say you apply for a $10,000 cash advance with a 10% fee. You don’t need to have the brain of a Harvard math professor to see that the 10% fee brings your loan total to $11,000.
Once you get the funds, Clearbanc will take a cut of each future sale until you’ve repaid the entire loan.
Let’s say it takes you six months to repay the loan. This would be equivalent to an APR of approximately 37%. If it takes you a full year to repay the loan, that would be equivalent to an APR of approximately 20%.
What Do You Need To Qualify For A Cash Advance with Clearbanc?
You must meet the following requirements to get approved for the cash advance:
- You must have a corporation or an LLC
- You must be in an eligible industry
- Your business must generate at least $10,000 of monthly revenue
- Your business must have at least six months of consistent revenue
What Type of Information do you need to Submit?
You need the following documents or information when you apply for a cash advance:
- Your banking account and routing number
- Information about your business
- Information about your officers and directors
- State-issued identification
- Articles of incorporation
What Type of Companies is Clearbanc Interested in Working With?
- Online retailers
- Software service providers
- Subscription companies
- Mobile apps with in-app purchases
The Pros and Cons
Clearbanc is a viable solution for Amazon sellers. However, it’s a little more expensive.
- No credit check
- Get up to $10 million dollars
- Competitive advance fee of 6% to 12.5%
- You only need to be in business for six months
- Daily repayments
- Effective interest rate is more expensive than traditional banks
- Only incorporated businesses and LLC’s can apply for the cash advance
- Reaching the customer service department can be difficult
Is Clearbanc a Legitimate Company?
Clearbanc’s offer may seem like it’s too good to be true. However, Clearbanc is a legitimate company. Clearbanc uses military encryption to protect your personal information from hackers and other prying eyes.
Unlike other lenders, Clearbanc will not share your information with third-parties without your consent. This is why it’s important for you to read the fine details before applying for a cash advance.
How Can You Apply For A Clearbanc Loan?
Here are the five steps for applying for a cash advance from Clearbanc:
1. Go to Clearbanc’s website and click “Get Started”.
2. Enter your business information and click “Calculate Now”.
3. Carefully follow the directions to connect your online accounts (for sales and payments). Click “Verify”.
4. Carefully follow the directions to connect accounts that you use for online marketing. Click “Continue”.
5. Create and enter a password for your new account. Click “Create your Account”.
Your application will be processed within two business days.
What Happens Next?
Clearbanc’s investment team will contact you within one to two business days. Log-into your account, so that you can review your offers. You will see clear instructions on how to submit documents and complete your application.
Once you are approved, the funds will be deposited in your bank account within 24 hours.
How Do Repayments Work?
Once your revenue begins to kick in, your repayments will begin. Please keep in mind that you cannot make any changes to your loan agreement. As the old saying goes, “A deal is a deal”.
If your business meets the following terms, you may be eligible to apply for more funds:
- Your company’s revenue has increased since the last advance
- Your company has repaid at least 80% of the balance
- Your company has a new stream of income that’s producing more revenue
- Your company did not take out the maximum advance during the last loan with Clearbanc
2. SellersFunding Business Loans
As you are starting to see, loans for Amazon sellers can help your business stay afloat.
SellersFunding Business Loans should be on your radar if you need to borrow up to $500,000 for your Amazon business.
If you need a short-term loan, SellersFunding Business Loans can help you grow your business. They work exclusively with e-commerce business owners.
Please keep in mind that you only have one year to pay back the loan. If things are slow in the market, you should think carefully before applying for the loan. This will help you avoid putting your business in a bad spot.
SellerFunding loan requirements:
- You must show six months of Amazon activity
- Your business must have secured at least $30,000 in sales within the last six months
- Minimum returns
- Your company must have positive reviews
- You must show consistent sales activity
What is SellersFunding?
SellersFunding offers unsecured short-term loans to online businesses that meet their lending requirements. In order to qualify, you must back the loan with a personal guarantee.
You will be responsible for paying off the loan if your business fails or if it cannot pay off the loan. In the end, you will be liable for the loan.
SellersFunding uses a unique mathematical algorithm that makes it possible for them to approve or decline your application within minutes.
If you are approved, you will get the loan proceeds within two to three business days. In our book, this is a fast turn-around. Getting loans for Amazon sellers can’t get any easier than this.
What’s Different about SellersFunding Loans?
Their loans are ideal for Amazon sellers. If you need a quick injection of capital, you should apply. The loan can help you buy more inventory, hire new staff, etc.
SellersFunding will take a close look at your sales activity within the last six months. If your sales activity is up to par, this will work in your favor.
SellersFunding Revenue Advance
Besides offers short-term loans, SellersFunding also offers a revenue advance to qualifying e-commerce merchants.
The revenue advance is similar to a merchant cash advance. SellersFunding’s algorithm will calculate your company’s projected revenue for the next three months (90 days). They will offer you 15% of this amount.
Your business pays it back with a daily percentage of online sales.
SellersFunding charges a 5% advance fee. This will come out of your loan proceeds.
You will be responsible for paying back the full 15%.
You should receive your loan proceeds within two business days.
What are the Advantages of Getting a Loan from SellersFunding?
Fewer fees – Applicants are only required to pay the $100 loan processing fee. This is great news considering the fact that many lenders expect applicants to cover the 1% to 5% loan origination fee. It’s also important to mention that there are no prepayment fees.
Great for e-commerce business owners – If traditional loans are not suitable for your business, SellersFunding may be your ideal financing option
Prequalification is available – You can get preapproved within two minutes.
Things You Should Look Out For
Short term – If you are approved, you will be required to repay the loan within three to twelve months. This can be risky for your business. If your business is unable to repay the loan within the agreed time period, you will be personally responsible for covering the loan.
Monthly rate – SellersFunding is well-known for advertising a low monthly rate. This can be confusing for some. If you take a close look at the terms, you will see that APRs start at 14.99%, not 1.25%.
Amazon-centric – The loan application is designed for Amazon sellers. If you are not an Amazon seller, the loan application can confuse you.
Will Applying for a Loan from SellersFunding Have an Impact on My Credit Score?
This is an excellent question. Applying for loans for Amazon sellers will normally have an impact on your credit score. Fortunately for you, this is not the case with SellersFunding.
SellersFunding will do a soft credit check when you apply for the loan. However, there are some instances where SellersFunding will do a hard credit pull. This can have an impact on your beacon score. SellersFunding must get your permission to do a hard credit pull.
Is SellerFunding’s Website Secure?
Yes, their website is secure. SellersFunding uses SSL encryption to protect your sensitive information.
Can I Get a Loan if I’m a Reseller?
If you can submit similar documentation, you can get a loan if you meet the requirements. Having an Amazon account will work in your favor.
It’s not unusual for Amazon sellers to run into financial hurdles. For example, slow payouts can hinder your cash flow and have a huge impact on your online business.
You want to take your business to the next level, but you don’t have enough capital to scale up. Does this sound familiar? If so, Payability may be the funding solution you’ve been looking for.
Payability offers two financial products to e-commerce sellers on Amazon and other virtual marketplaces.
Instant Access – This financial product is similar to invoice factoring. You get daily payouts for your marketplace sales. With Instant Access, you don’t have to wait for weeks to get the capital you’ve earned from your sales.
Instant Advance – Payability buys future sales and gives you a lump sum payment. This financial product works like a merchant cash advance.
These financial products are great, but they do come at a cost.
Payability’s simple fee structure makes it easy for you to comprehend your cost of borrowing, and their fees are competitive.
Getting funding from Payability is not as hard as you may believe. You will not have to deal with a credit check. Payability will look at the performance of your business. If things are going well, you stand a good chance of getting approved.
Payability has helped thousands of e-commerce merchants since 2016. According to their website, they have provided over $1 billion dollars in funding.
Can you get approved for a loan? Let’s read on to see if you are the ideal loan candidate for Payability.
Payability offers two primary products that are similar to the following categories:
Merchant Case Advance – This type of cash advance involves a lender purchasing a percentage of your future sales for a lump sum. This financial product seems like a loan, but it isn’t governed by laws of regulating loans. The full collection of a percentage of your daily sales serves as a “Payment”.
Invoice Factoring – This is where you will receive a percentage of the funds that would be earned from unpaid invoices. A small fee is typically attached to Invoice Factoring.
Payability Borrower Qualifications:
The requirements are based on the product you apply to receive.
You must meet the following requirements for the Instant Access product:
- Time in Business: You must prove that you have been in business for at least three months
- Marketplace Sales: Your business must generate at least $2,000 per month
To get approved for the Payability Instance Advance, you must meet the following requirements:
- Time in Business: You must show nine months of solid sales history
- Personal Credit Score: Not applicable
- Marketplace Sales: You must prove that your business generates at least $10,000 per month
It’s now time for us to look at the terms and fees.
Payability Terms and Fees
To get Payability’s Instant Access, you must be ready to pay a single flat fee of 1% to 2% of your total gross sales. Your sales history and monthly sales will determine your fee.
Advance Amount: Typically 80% of daily receivables
Fixed Fee: 1% to 2% of gross sales
As an e-commerce merchant, you are probably familiar with the hurdles that come from waiting on your payments. It may take weeks for your marketplace revenue to kick in. This can have a negative impact on your business if you are in need of quick cash.
Unlike conventional banks and credit unions, Payability’s Instant Access can give you a quick cash infusion.
Payability is in position to pay up to 80% of your sales revenue from the previous day. The remainder will be covered on the marketplace’s regular schedule (less any potential fees imposed by Payability). For example, if your payout is $1,200 on Monday, Payability can offer you up to $1,000 on Tuesday.
The remaining balance (less Payability’s fees) will be distributed on the marketplace’s normal schedule.
Once you get approved for an Instance Access account, you will have direct access to your loan proceeds within one day. You sales will be added to your account daily, so that you can send more capital to your bank account.
Let’s look at an illustration. If Payability sets your fee at 1% and your gross sales are $10,000 in one payment period, you’ll be required to pay a $100 fee to get daily payouts.
E-commerce sellers making more than $100,000 per month can inquire about special rates.
Payability does not charge origination fees, annual fees, or application fees for their services.
If you have your eyes on getting an Instance Advance, you can look forward to getting an upfront payment for the purchase of future receivables. You will have 16 to 20 weeks to repay the proceeds. You will also be responsible for paying a weekly fee.
Advance Amount – Up to $250,000
Term of Loan – You will have 16 to 20 weeks to repay the loan
Interest Rates – The weekly fee starts at 0.50% of purchased receivables
As I stated earlier, the Instant Advance is similar to a merchant cash advance. However, there are some details you need to be aware of.
With the Instant Advance, you can get up to $250,000 to grow your business. Payability will examine your sales history carefully. This will help them calculate your future earnings.
Once this amount has been determined, you will get 80% of your predicted earnings immediately.
If your business is generating more than $100,000 per month, you can get in touch with Payability to find out about special rates.
I thought I would mention that Payability has a Loyalty Program. If you get approved for the loyalty program, you will get higher fees and lower advances.
As a customer, you can get the Payability Seller Card. This is one of the perks that come from applying for loans for Amazon sellers.
The Payablity Seller Card makes it easier for you to use your Instant Advance or Instance Access funds.
With the Payability Seller Card at your disposal, there will be no need for you to wait on bank transfers. When your payout hits your card, you can use it immediately. This includes weekends and holidays.
You can use your card online and in-person.
Did you know that you can get up to 2% cash back on your purchases? You can also get up to 20% cash back by signing up for services and software through Payablity’s partners. This includes shopkeeper, SellerCare, and many others.
Fortunately, you don’t have to go through a pesky credit check to get your Payability Seller Card.
Payability Application Process
Are you ready to get funding for your online business? First, submit your application. Payability will ask for the following: your government name, name of your business, D.O.B, social security number, contact information, and business start date.
After that, you will be asked to select your supported marketplace and funding details. Payability will ask you to connect your seller accounts. This will help them examine your business.
If you are approved, you will have your funds the next day. It’s really that simple.
- No hidden fees
- You can get a discount for paying your loan off ahead of the agreed time
- The loan proceeds are deposited fast
- The rate is higher than what you will find with traditional loans
Final Word The three lending sources above are great options for Amazon sellers that need fast funding. They offer viable loans for Amazon sellers. Take your time while reading their terms. This will help you choose the best lender for your business.
Do You Need an FBA Loan?
I must point that getting a loan for your Amazon business is not that easy. Conventional lenders like banks and credit unions do not know what to do for your business. Unfortunately, there aren’t many Amazon business based loans out there.
Banks and credit unions are used to dealing with brick-and-mortar businesses. In return for the loan, they ask the prospective borrower to pledge collateral. This is a huge hurdle for Amazon business owners. You may be running a profitable business, but a lack of collateral will not make you the prime candidate for a traditional business loan.
If you are searching for a small business loan, you may want to avoid commercial lenders. They are normally interested in funding projects that require a minimum of $100,000. From their perspective, if you need less than this, you are not worth their time.