Amazon Loan Alternatives

By: Micah

An Amazon Loan is a fantastic tool.  Easy paybacks, quick turn-around, revolving around your inventory, and no other collateral is needed.  Sometimes, however, the typical Amazon seller wants to purchase more inventory.  Let’s speak about how….

1. Term Loan or Cash Advance

Very often, the turn-around time to see Return on Investment to an online Amazon seller is very fast.  Every $1 invested can be turned around to $1.30 within 1-2 months!  Every business is different, but even if the cost of capital is high, the ROI justifies the high cost of capital and shorter term than a standard bank loan.

A Term Loan might justify a large injunction of capital to expand…. but to buy inventory, it just doesn’t make sense.  It’s too much money at once, and won’t renew enough.  What would be needed is a term loan with low stipulations with quick approval, and enough money to service the debt.

2. Unsecured Business Lines of Credit

We’ve spoken about Lines of Credit on other posts.  Since Amazon files a UCC lien against the inventory, the next likely place to turn for Line of Credit would have to be an Unsecured Business Line of Credit or a Secured Line of Credit, using real estate as the collateral.  There are two types:

  1. Cash Lines of Credit
    There are really two types here.

    • For clients with Excellent Credit, we recommend Interest-Only bank lines and 0 APR credit cards.
    • For clients with Fair Credit, or No or Bad Credit, there are amortized and simple-interest lines of credit with no prepayment penalty, use as you need it, pay it back when you get paid to reduce your payments.
  2. Credit Cards – We recommend 0 APR cards that maximize the time the money can be cycled.  Also, only excellent credit (680+ FICO) can be considered.

3. A Secured Line of Credit Real Estate to secure a loan

We have lenders who will take a second position on title of any real estate, providing a Line of Credit up to $5mm, providing up to 10% yearly gross revenue.  Clients will need a FICO over 650, strong bank statements, profitability, and be doing at least $2mm yearly to qualify.  It’s a fantastic way to supplement your Amazon Loan, and use existing collateral to obtain similar rates to Amazon, with interest-only monthly payments.

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