- Seller Labs
- On April 19, 2016
If you want to grow your business, but don’t have excess capital lying around getting, a loan may be necessary to take your online business to the next level. Unfortunately traditional banks don’t really know what to do about Amazon stores. Getting loans for an online business can be tough since banks are used to dealing with more traditional business models. So where can an online seller get a safe, fair and quick loan? In this post we’re going to compare the two best options in Kabbage and Amazon Lending.
Kabbage was established in 2009 to fulfill the needs of online merchants looking for capital to expand their businesses. Kabbage boasts an up to date automated approval process that looks at not only your business volume, time in business, credit score transaction volume, but also your social media activity, online presence, and user feedback ratings. Kabbage is a front runner for providing businesses with online loans.
Amazon Lending was started in 2014 in an attempt to help Amazon sellers grow their business and by association help Amazon grow theirs. As of now Amazon Lending is invitation only. Amazon invites only sellers with approved sales history and who it thinks will be the best fit for their lending program. Their rates are excellent and the money is easily credited to your Amazon account.
Amazon Lending vs Kabbage
Our own Patrick Muir touched on this subject in a 25k Challenge post, but let’s delve deeper. Amazon Lending is made solely for Amazon sellers. It is designed to help boost that exact business type, plus it boasts direct deposits into your bank. Its rates are very good (it will cost Patrick around $600 over 6 months to borrow $11,000), and since they select you it couldn’t be simpler to use. The biggest difference between the two according to Patrick, who has used both lending platforms, is that “Amazon Lending is invitation only. It’s better than Kabbage. But Kabbage is available to anyone. Amazon Lending has better rates, but you have to wait to be invited.” So until Amazon opens up its doors for all sellers to go for a loan, your options are limited.
Let’s not count Kabbage down for the count though. It has other qualities beyond availability. Kabbage has the benefit of its fully automated loan approval process. You can see your loan eligibility in mere minutes. You can receive loans up to $100,000. Kabbage also lets you withdraw the money for your loan in small increments. This allows you to keep your loan at a minimum and manage your purchases and growth carefully. Most importantly Kabbage is not limited only to Amazon sellers. Its core business is probably Amazon sellers but any online business can apply for a loan, not just those with an Amazon store.
In short, this checklist will help tell you which loan is right for you. Maybe you’re like Patrick and both work well for you.
Amazon Lending is right for you if:
- You received an invite
- You are exclusively an Amazon seller
- You are looking to keep your growth simple, straightforward, and manageable
- You don’t mind taking your loan out all at once
- You want great loan rates
Kabbage is the right fit for you if:
- You want a loan for something other than Amazon
- You want your loan fast
- You want a potentially larger loan
- You want to borrow money in smaller more manageable increments
Loans are a great way to bring in capital that can stimulate growth for your business. When you used wisely and carefully they are a great win-win for everyone involved in the market. If traditional banks are wary about your tech reliant business consider both of these loan platforms to suit your needs.
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