Amazon teams Bank of America Merrill Lynch to expand its lending program. Partnering with Bank of America allows Amazon to reduce its risk and access capital.
Amazon CEO Jeff Bezos said he was looking to team up with banks that could help his company expand its lending program for small businesses that sell on Amazon’s websites.
Amazon Lending is a program that makes loans of $1,000 to $750,000. This program provides loans with terms of up to a year.
This program is useful for companies that may have difficulty landing traditional business loan.
Amazon said it issued more than $1 billion in loans during the previous 12 month period.
Source involved with Amazon Lending said the slowdown is not surprising because the team has always taken a measured approach to growth.
Sources said, the program is not oriented around making money from interest payments, but to support merchants selling on Amazon’s marketplace and to boost Amazon’s overall sales growth.
The company said in its latest annual report that the facility was raised to $600 million. Amazon Lending isn’t the best bet for many businesses.
Once they have developed they can give equal competition. One source with knowledge of Amazon Lending said annual rates typically range from 6 percent to 14 percent.
Stephan Aarstol was mentioned as having one of the fastest growing companies in San Diego, “with a little help from Amazon Lending.”
But Aarstol said he no longer borrows from Amazon, which charged him between 11 percent and 13 percent annually.
Aarstol said his company has grown big enough and now it can afford the more attractive rates from elsewhere.