https://www.forbes.com/sites/advisor/2020/06/15/amazon-offers-a-line-of-credit-to-select-sellers/?sh=5d0ce98c3470
The APR on the Amazon line of credit will start at 6.99%
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Amazon and Goldman Sachs are joining forces in the small business lending market. Select merchants who sell items on the Amazon platform will soon receive invitations to apply for a line of credit via Goldman’s Marcus bank brand, according to a CNBC report.
The announcement could be well timed for sellers on the Amazon platform whose businesses may have been affected by the pandemic. Although small business loans are available through the Coronavirus, Aid, Relief and Economic Security Act’s Paycheck Protection Program as well as other bank programs, a vendor who already lists their wares on the Amazon site may find it easiest to manage their loan through the same company.
This is the first time Amazon will hand off credit underwriting to an outside company. Its current loan products, which include the Amazon Business Prime Credit Card and the Amazon Business Credit Card, are underwritten by Amazon, although they’re issued in partnership with American Express. Under the agreement, targeted customers will be invited to apply for lines of credit up to $1 million with APRs ranging from 6.99% to 20.99%.
The arrangement is not fee-free. Borrowers who don’t use at least 30% of their available credit will be assessed a maintenance fee, and late or missed payments also will be subject to a penalty charge. It’s not uncommon to be charged a maintenance fee on a line of credit, although those fees typically are fixed and may be paid annually.
Under the new arrangement, Amazon will share merchant data with Goldman with a seller’s approval, and the bank can then use that information as part of its underwriting. Amazon will not have access to the data that Goldman collects for its underwriting process, and Goldman won’t offer other lending products to its credit line customers. Loan applications will be done online via Amazon’s Seller Central hub, with decisions made within minutes, reports CNBC.
Goldman Continues its Push into Small Business, Consumer Markets
The deal bolsters Goldman’s push to expand into Main Street finance. Last year, the online behemoth also used Goldman as the lead financier in its $13.7 billion merger with Whole Foods. Other recent forays into consumer lending include inking a deal last summer to launch the Apple Credit Card.
In April, Goldman partnered with JetBlue on an installment loan product, called MarcusPay, that allows ticket buyers to break up the cost of a ticket into monthly payments. Previous successes by the bank to expand its offerings include a 2017 deal to become one of the lending partners for tax preparation software company Intuit and a newly developed line of high-yield savings and loan products exclusively for AARP members.