- Patrick Muir
- On April 11, 2016
- 2 Comments
I want to expand my Amazon business faster, but I’ve hit a bottle neck in capital. I cannot make enough in profits alone to invest into make my business grow at a healthy pace. Getting a loan can sound scary, but if handled properly it can be a great stepping stone in pushing my Amazon business to the next level.
Seller Labs provided me with the initial $25,000 investment, but that can only take me so far. I’ve reinvested all of my profits, but that is slow growth. I have several big ideas. I feel confident in my ability to make products sell well on Amazon. I just need the capital to scale the business.
So one option I explored and decided to use was Kabbage.com. Kabbage is a company that specializes in giving small business loans by having users simply connect a few accounts including their Amazon business. A key customer segment for Kabbage is Amazon sellers, so they are well versed with the needs of on online seller. The best part is that you don’t talk to anyone. I connected my Amazon Seller Central account and my Wells Fargo business account and a few minutes later I got a lending limit.
The site says I’m eligible to take out $15,000 with a payback period of six months. The other great thing about Kabbage.com is that I won’t have to take out the loan all at once. I can take out the amount I need in increments until I reach the $15,000 limit.
I highly recommend sellers to use their own capital to test ideas and see if they sell on Amazon. Once you’ve proven you have a winning product, I believe it’s okay to take out a loan from a company like Kabbage.com to buy inventory to scale the business.
Another option I’ve just starting using is Amazon Lending. It is an invite only service. I randomly received an email one day from Amazon Lending with an invite to take out a loan. You also don’t have to talk to anyone. Simply press a button that confirms you agree to the Amazon Lending terms. The company deposits the money into your Amazon Seller Central account and immediately sends all the money, including your current balance on Amazon, to your bank.
I took out an $11,000 loan from Amazon Lending two weeks ago to increase inventory. I’m scheduled to pay it back in installments over the next 6-months. Amazon Lending takes the payment from my Amazon Seller Central account. It will cost me about $600 over 6 months to borrow $11,000.
The downside of Amazon Lending is that I had to borrow all $11,000 at once rather then letting me borrow a little at a time like Kabbage.
Using loans can be daunting because paying them back seems like it’s cutting into profits. If mishandled or abused, loans can definitely do that and take a toll on your business. If you look at the big picture however, and see the growth they can provide, you will see how loans can get the ball rolling on expanding your Amazon business.
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