US e-commerce giant Amazon is gaining traction in the SME loan market, issuing $1 billion in loans in the last 12 months.
Amazon is gaining traction in the SME loan market. The company announced at the beginning of this month that it had originated over $3 billion in loans to more than 20,000 small businesses since 2011. Amazon Lending offers short-term business loans, for up to 12 months, to micro, small and medium-sized businesses selling on Amazon to help them grow their revenues. With access to more than 300 million active customer accounts worldwide, Amazon provides small businesses the opportunity to reach customers quickly.
In the last 12 months alone, Amazon has loaned more than $1 billion to small businesses across the US, UK, and Japan. The company uses algorithms to identify merchants with good selling histories and offers them loans which are to be repaid through sales made on the site.
Loan amounts range from $1,000 to $750,000 and are generally used by merchants to buy more inventory and expand product lines. To date, more than half of the small businesses Amazon has loaned to have taken a second loan.
Commenting on the milestone, Peyush Nahar, VP for Amazon Marketplace, stated,
“We created Amazon Lending to make it simple for up-and-coming small businesses to efficiently get a business loan because we know that an infusion of capital at the right moment can put a small business on the path to even greater success. Small businesses are in our DNA. Amazon is providing capital to small businesses to help them expand inventory and operations at a critical period of their growth. We understand that a small loan can go a long way.”
While loans are currently restricted to select merchants in Amazon’s marketplace, the company’s entry into small-business lending will likely expand in the future. When this occurs, banks have reason to be concerned.
More here [businesswire]