4 ms·

The interesting part to me is that amazon gives out loans to small businesses. I never knew that. I’m curious how amazon will handle the situation. Will the mer

The interesting part to me is that amazon gives out loans to small businesses. I never knew that. I’m curious how amazon will handle the situation. Will the merchant be required to pay back the stolen loan funds?

bdibs 7y ago
Amazon's in the perfect position to give loans to their sellers. They have all the data in the world about how a seller is doing on the platform, so why not make some (relatively) safe money off interest and boosted sales?
- vkou 7y ago
  And the best part is that because they can hold money from sales for months, before remitting it to a merchant, they can loan that money right out to other merchants.
  - ikeboy 7y ago
    Huh? In the vast majority of cases money is released within 2 weeks of a sale. The exceptions are if an account gets suspended, or if there's a sudden increase in sales and it's flagged, in which case they might hold it for another week or two. The only time money is held for over a month is if the account was suspended and not reinstated by then.
    - bootlooped 7y ago
      Some sellers even get settlements weekly or more frequently. I'm not sure how, but I know it was at least possible sometime in the past.
    - epanchin 7y ago
      Two weeks still sounds like a considerable float to lend from.
      - ikeboy 7y ago
        They have a bank backing the loans anyway, it's not their own cash.
- mcpherrinm 7y ago
  Loaning money to their merchants allows their merchants to buy more inventory to ship to Amazon to sell. Thus Amazon benefits by making more sales, too.
  - pbhjpbhj 7y ago
    It's crazy really, they loan the money they would in the past have to use to buy stock, but they also don't have to pay for warehousing (straight away). Presumably it helps with inventory management too - like the loanee indicates the inventory they're buying which means Amazon can factor that in. Then they charge interest ... However, whilst this sounds good for Amazon, is it more efficient - in economic terms - or does it just reduce Amazon's risks and costs.
mason55 7y ago
Square does the same thing. If you control the flow of money to the merchant you’re in a great place for both risk assessment and ensuring that you get paid back.
- tjbiddle 7y ago
  As does Shopify.
  - needaccount 7y ago
    Quickbooks too!
    - jeromegv 7y ago
      And Paypal!
      - novaleaf 7y ago
        and Stripe. They have an offer on my dashboard that's 10% interest for 3x monthly subscriptions (not total monthly revenue), 20% interest for 6x. To me, it seems rather aggressive. I'd have to be super desperate to accept those terms.
    - arthurcolle 7y ago
      Quickbooks? Really? I'd think they are more of a merchant service compared to merchant financing...
segmondy 7y ago
Almost every processor gives out loans to small businesses. Most small businesses struggle with cash flow, so these loans are with very high interest rate. 20% etc. It's a very nice money making machine. Before they pay the merchant, they collect the interest and part of the payment from their daily transactions.

bdibs 7y ago

Amazon's in the perfect position to give loans to their sellers. They have all the data in the world about how a seller is doing on the platform, so why not make some (relatively) safe money off interest and boosted sales?

vkou 7y ago
And the best part is that because they can hold money from sales for months, before remitting it to a merchant, they can loan that money right out to other merchants.
- ikeboy 7y ago
  Huh? In the vast majority of cases money is released within 2 weeks of a sale. The exceptions are if an account gets suspended, or if there's a sudden increase in sales and it's flagged, in which case they might hold it for another week or two. The only time money is held for over a month is if the account was suspended and not reinstated by then.
  - bootlooped 7y ago
    Some sellers even get settlements weekly or more frequently. I'm not sure how, but I know it was at least possible sometime in the past.
  - epanchin 7y ago
    Two weeks still sounds like a considerable float to lend from.
    - ikeboy 7y ago
      They have a bank backing the loans anyway, it's not their own cash.
mcpherrinm 7y ago
Loaning money to their merchants allows their merchants to buy more inventory to ship to Amazon to sell. Thus Amazon benefits by making more sales, too.
- pbhjpbhj 7y ago
  It's crazy really, they loan the money they would in the past have to use to buy stock, but they also don't have to pay for warehousing (straight away). Presumably it helps with inventory management too - like the loanee indicates the inventory they're buying which means Amazon can factor that in. Then they charge interest ... However, whilst this sounds good for Amazon, is it more efficient - in economic terms - or does it just reduce Amazon's risks and costs.

mason55 7y ago

Square does the same thing. If you control the flow of money to the merchant you’re in a great place for both risk assessment and ensuring that you get paid back.

tjbiddle 7y ago
As does Shopify.
- needaccount 7y ago
  Quickbooks too!
  - jeromegv 7y ago
    And Paypal!
    - novaleaf 7y ago
      and Stripe. They have an offer on my dashboard that's 10% interest for 3x monthly subscriptions (not total monthly revenue), 20% interest for 6x. To me, it seems rather aggressive. I'd have to be super desperate to accept those terms.
  - arthurcolle 7y ago
    Quickbooks? Really? I'd think they are more of a merchant service compared to merchant financing...

segmondy 7y ago

Almost every processor gives out loans to small businesses. Most small businesses struggle with cash flow, so these loans are with very high interest rate. 20% etc. It's a very nice money making machine. Before they pay the merchant, they collect the interest and part of the payment from their daily transactions.