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Amazon is Ready to Offer More Small Business Lending
The giant Amazon is set to grow even further. CNBC reported that Amazon is partnering with Bank of America Merrill Lynch to expand its small business lending program. The aim of this partnership, which was revealed by sources that preferred to not be named, is to allow the ecommerce giant to reduce its risk and provide credit to more merchants.
Amazon’s lending program is an invitation-only program. The loan offers are anywhere from $1,000 to $750,000, with terms of up to a year. These loans are extended to small businesses that are having trouble finding a traditional lender willing to offer them a business loan. Just last year, President Barack Obama mentioned these new loan options, saying that Amazon and Google are two companies that will play a big role in the wave of change in small business lending.
Karen Mills, Obama’s former small business advisor, said, “I think they are going to dominate the market, and that is the next phase that’s coming. But the question is, in what form would that come and…under what regulatory authority?”
Amazon is Ready to Hand Out More
Recently, Amazon chose to scale back on its loan offerings, even downsizing its lending staff. According to information revealed in June 2017, Amazon had handed out more than $1 billion in loans. The reason for stepping back from customer outreach was to focus more energy on handling the credit risks of operating a large-scale lending practice.
Amazon’s 2016 annual report shows that it received a $500 million revolving credit facility from a “lender”. That facility, according to the latest annual report, was then raised to $600 million and could “from time to time increase in the future subject to lender approval”. Now that Amazon has a banking partner, new reports have hinted that Amazon is ready to pick back up again.
How Many Options do Small Businesses Really Have?
For years, small businesses have had a hard time finding any help from the banks. If the business was considered high-risk, the likelihood of funding moved from being difficult to nearly impossible. This is where alternative lenders, and now Amazon, has stepped in.
Alternative providers offer merchant loans that are often better suited to small business’ needs. Small businesses typically need cash fast, much faster than a bank can provide capital. Banks take weeks or even months to let business owners know if they have been approved or denied for funding. Alternative lenders, on the other hand, offer a fast application process and funding times.
If you have a small business or have plans to launch one soon, you will be glad to hear that small business lending is on the rise. In your search for funding, make sure you also consider the many options alternative lenders have to offer.
Author Bio:As an account executive, Michael Hollis has funded millions by using alternative funding solutions. His experience and extensive knowledge of the industry has made him a merchant loans expert at First American Merchant.