Amazon Launches Cash Advance Program for 3rd-Party Sellers

Amazon began rolling out a new cash advance program Tuesday for its small-to-medium (SMB) third-party sellers that’s said to help them grow their businesses. The financing option, provided by Parafin, ties payment on a cash advance to a portion of sellers’ future sales for a fixed fee and gives eligible sellers quick access to $500-$10 million of capital “when they need it, paired with flexible payment plans,” the e-commerce company said. Sellers can access capital “in a matter of days” with capped rates, no fixed term, personal guarantee, credit checks, “excessive fees” or late fees, it said. The cash advance allows SMBs to develop new products, protect margins, grow inventory and “efficiently manage cash flow,” Amazon said. A payment schedule is determined by a fixed percentage of the seller’s gross merchandise sales until the funding is paid off, with no minimum payments or interest -- but a fixed capital fee -- and no collateral required, Amazon said. Payments are required only during periods that a seller has made sales, and the fixed payment rate protects them during periods of slow or no sales, it said. Sellers must have been selling on Amazon for at least three months to be eligible for the program that Amazon said will be available to hundreds of thousands of sellers by early next year.