Amazon Launches New Merchant Cash Advance Program Provided by Parafin, Doubling Down on Its Support for Small- and Medium-Sized Businesses

Rhea-AI Summary

Amazon has introduced a new merchant cash advance financing solution in partnership with Parafin, aimed at helping U.S. sellers access capital to expand their businesses. This innovative option allows sellers to secure funding ranging from $500 to $10 million based on a percentage of their future sales, offering flexibility with no fixed payments, interest, or collateral. The program aims to support sellers in managing cash flow and reducing risks during slow sales periods, with plans to roll out to hundreds of thousands of sellers by early 2023.

Positive

• Launch of a new merchant cash advance financing option for sellers.
• Access to funding from $500 up to $10 million supports business expansion.
• Flexible payment plans linked to sellers' future sales protect during low sales periods.
• No fixed payments, interests, or collateral required, reducing financial burdens.

Negative

• None.

Sellers will have access to convenient capital with flexible payment options through Amazon’s partnership with Parafin

New sales-based financing option will help Amazon sellers in the U.S. expand their businesses and develop new products

SEATTLE--(BUSINESS WIRE)-- Today, Amazon (NASDAQ: AMZN) launched a new financing solution, a merchant cash advance, provided by Parafin–a U.S.-based provider of growth capital for sellers. This secure financing option ties payment on the cash advance to a portion of sellers’ future sales for a fixed capital fee and provides eligible Amazon sellers with easy and quick access to capital when they need it, paired with flexible payment plans. With this program, sellers can access capital in a matter of days with transparent and capped rates, no fixed term, no personal guarantee, no credit checks or excessive paperwork, and no late fees. The program rolls out to some U.S.-based businesses today, and it will be available to hundreds of thousands of eligible sellers by early 2023.

This new merchant cash advance, through which eligible businesses can access capital from $500 up to $10 million, provides sellers with financing opportunities to expand their businesses, protect margins, develop new products, grow inventory, and efficiently manage cashflow. A flexible payment schedule is determined by a fixed percentage of the seller’s Gross Merchandise Sales (GMS) until the funding is paid off, with no minimum payments, no interest (only a fixed capital fee), and no collateral required—unlike a traditional loan. Payments are only required during periods that a seller has made sales, and the fixed payment rate ultimately protects them during periods of slow or no sales. This financing option will provide sellers that have been selling on Amazon.com for at least three months with an additional solution for their financial needs alongside the existing financing solutions portfolio of term loans, interest only loans, and lines of credit provided by Amazon and its third-party financing partners.

“Amazon is committed to providing convenient and flexible access to capital for our sellers, regardless of their size,” said Tai Koottatep, director and general manager, Amazon WW B2B Payments & Lending. “Today’s launch is another milestone in strengthening Amazon’s commitment to sellers, and builds on the strong portfolio of financial solutions we already provide. This latest offering significantly expands sellers’ reach and capabilities, and broadens their access to capital in a flexible way—one that helps them control their cashflow, and by extension, their entire business.”

“We founded Parafin with the mission to grow small businesses, and we’re thrilled that we have the opportunity to do that by providing Amazon sellers with this merchant cash advance option,” said Vineet Goel, co-founder of Parafin. “It’s a privilege to count ourselves among Amazon’s suite of financial solutions, and we look forward to making a difference for Amazon.com sellers looking to expand their business.”

“It can be difficult for small- and medium-sized businesses to access capital, regardless of whether they’re just getting started or are more established,” said Laurie McCabe, partner at SMB Group. “What Amazon is doing in partnership with Parafin to provide quick access to capital in a convenient and transparent way—and one that protects sellers during periods of low or no sales—is significant for the industry. It will be exciting to see how Amazon sellers use this merchant cash advance solution to help grow their businesses.”

For more information on this merchant cash advance, please visit https://sell.amazon.com/programs/amazon-lending.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221101005411/en/

Amazon.com, Inc.

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Source: Amazon.com, Inc.

FAQ

What is Amazon's new financing solution for sellers?

Amazon has launched a merchant cash advance financing solution in partnership with Parafin to provide quick and flexible access to capital for sellers.

How much funding can sellers access through Amazon's new cash advance?

Sellers can access funding ranging from $500 up to $10 million through Amazon's new merchant cash advance.

When will the new financing option be available to all eligible sellers?

The financing option will be available to hundreds of thousands of eligible sellers by early 2023.

What are the key features of Amazon's cash advance for sellers?

The key features include flexible payment plans, no fixed payments or interest, and funding tied to a percentage of future sales.

How does the new cash advance help Amazon sellers manage cash flow?

The cash advance allows sellers to only make payments during sales periods, helping them manage cash flow effectively.