Amazon FBA Financing Guide: How to Fund Your Ecommerce Business Growth Learn about funding options your company can take to bring their FBA businesses to the next level.

By Omer Riaz

Opinions expressed by Entrepreneur contributors are their own.

Whether you're an early-stage ecommerce startup, a thriving online business or an established brand, transitioning to the next level requires capital. You might need seed funding to get your business up and running — setting up sourcing channels, researching the right niche, finalizing packaging and more.

You might be scaling fast and need funds to order inventory — avoiding stock-outs and competing with rival sellers. Expansion into other marketplaces and geographies requires additional capital, too.

You may also need urgent capital to address a key strategic direction (rebranding, product line expansion or growing your supplier base). Building good relationships with lenders, as well as your suppliers, is crucial to getting favorable terms for years down the line, boosting your growth as a new seller.

Related: What Is Amazon FBA? Guide to a Fulfillment by Amazon Business

Before you go for financing, take time to decide why exactly you're looking for funds: What are your business goals? Where will you spend the funds? Do you have a concrete business plan? Are you comfortable with the payback terms? Estimate exactly how much you need, and don't get tempted to borrow more than that.

The businesses that we've successfully grown and positioned for a profitable exit, chose one of the following funding options to take their FBA businesses to the next level:

1. Amazon lending

One of the simplest funding options for new FBA businesses with excellent customer reviews, no complaints in the last 6 months and total sales of at least $10,000 in the last year, is Amazon's own lending service. Sellers can apply for term loans ranging from $1,000 to $750,000 with interest rates from 3% to 16%.

Amazon also has a line-of-credit option available, in partnership with Marcus by Goldman Sachs, wherein sellers pay interest only on the funds utilized. Interest rates range from 6.99% to 12.99%.

While you get quick approvals (from 1 to 5 days), there are a few cons as well. The term loans have a short-term payback schedule. Hence, monthly payments are high, regardless of your sales. Moreover, the funds can be used only for restocking Amazon inventory. In contrast, line-of-credit funds can be used for other needs including staffing and advertising.

Related: 3 Things to Consider Before Owning an Amazon FBA Business

2. Fintech lending

A host of new-age, technology-powered companies are enabling fast and convenient financing for growing FBA businesses, having consistent cash flow with impeccable financial performance. Vendors like Payability and Sellers Funding offer quick funding up to $250,000, based on your monthly revenue, if you have at least $5,000-$10,000 in monthly sales.

One-of-a-kind funding option, AccrueMe offers up to $1 million in funding to sellers with at least a 6-month track record — with no interest, no monthly payments and no loss of ownership for the seller. As Don Henig, co-founder of AccrueMe, rightly puts the need for financing:

"The beauty of being an FBA seller is that once you have established a profitable product, you have almost unlimited profit opportunity because of Amazon's market reach. The only limit is a seller's capital. The sooner a seller can secure and deploy necessary capital, the sooner they can protect and expand their market share and profitability. Delay in deploying capital, just cedes the profit potential to competitors. That is why it's so important to prioritize access to capital."

3. Business term loans from alternative lenders

Term loans have been a staple of traditional banks for decades. But alternative lenders and fintech companies have also started offering term loans to ecommerce businesses. These loans are suitable for large and established FBA businesses in the later stages of their lifecycle.

As revenue numbers and credit history are taken into account, these term loans are difficult to secure for early-stage businesses.

Related: Term Loans vs. Lines of Credit: Which One Is Right for Your Business?

4. Merchant Cash Advances (MCAs)

Now, even new ecommerce businesses can take advantage of MCAs to borrow up to $500,000 and pay the funds back based on a fixed percentage of daily or weekly sales, depending on the agreed-upon interest rate or factor rate (ranging from 1.1 to 1.5).

MCAs are a good fit for new businesses having relatively low credit scores and lacking decent cash flow (at least $10,000 monthly revenue). Approvals are quick (often within a few hours), with minimal documentation, and there are rarely any credit checks or collateral requirements.

However, you need to be wary of the high-interest rates (up to 25%-30% APR) compared to other options and the shorter payback period leading to higher repayments.

5. Peer-to-peer lending

You can secure funding directly from investors who like your business and are confident in your credit and sales history. This works well if you're operating in a niche industry or have a unique product.

This funding option is much more flexible compared to term loans and MCAs, as credit score is not the only criterion used for judging your business. But approval times are longer, and the interest rates can go up to 9-10%. Moreover, things like credit checks, financial records and detailed business plans are must-haves.

6. Brand accelerators

Ecommerce brand accelerators are experts armed with strategic and technological know-how to grow the valuation of your business. When you partner with a brand accelerator, industry experts analyze the ins and outs of your business and develop a unique growth plan for scaling it to new heights.

They don't bill you for their services until your valuation actually sees a jump, and they'll then charge you a small percentage of that increase in valuation. This makes brand accelerators an economical option to fund your ecommerce growth.

Your financing journey should begin with crystal clear goals about how you'll put the funds to use. FBA financing can provide you with a launchpad to break through to the next stage of your business and scale it the way you want.

Lastly, don't think about debt as a bad thing on your balance sheet. Money attracts money, and financing is essential to making that happen.

Wavy Line
Omer Riaz

CEO of

Omer Riaz is passionate about growing brands online, harnessing a data-driven marketing strategy. Primarily, he helps small-business owners find success on ecommerce marketplaces such as Amazon and Walmart. He enjoys sharing his knowledge and helping companies grow.

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