Amazon Introduces Merchant Cash Advance Program Provided by Parafin

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.”

Tai Koottatep, director and general manager, Amazon WW B2B Payments & Lending, said:

“Amazon is committed to providing convenient and flexible access to capital for our sellers, regardless of their size. 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.”

Vineet Goel, co-founder of Parafin, remarked:

“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. 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.”

Laurie McCabe, partner at SMB Group, added:

“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. 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.”

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