SBA Loans For Amazon Sellers were a hot topic especially during the pandemic because Amazon Sellers were getting approved for Economic Injury Disaster Loans from the SBA far in excess of what they would qualify for from any other funding source.
While SBA EIDL loans are no longer available to most Amazon Sellers, SBA Loans could be a good option for US-Based Amazon Sellers with a strong, detailed operating history and the patience to go through a long and thorough underwriting process.
Can Amazon Sellers Qualify for SBA Loans?
Yes. While it is possible for US-Based Amazon Sellers to qualify for an SBA Loan they will typically qualify for loans of less than $25,000 under the SBA 7(a) program. Amazon Sellers with more than 2 years of profitable operating history and significant collateral may be eligible for larger SBA Loans
Benefits of SBA Loans For Amazon Sellers
While SBA loans typically have lower interest rates and longer payback periods than most other lending options for Amazon Sellers, SBA Loans are usually not the most accessible or logical option for Amazon Sellers. This is because Amazon Sellers with less than 2 years of very well-documented business success will usually only qualify for small SBA loans that require a personal guarantee from the business owner.
While SBA loans tend to have a longer repayment period than other options, it's important to note that SBA Loans usually must be repaid when you sell your Amazon Business. For example, if you have an SBA Loan for $500k and have assets in your business of $250k, you will need to sell your business for 2X its asset value just to repay the loan before you see any proceeds from an exit.
Challenges of SBA Loans For Amazon Sellers
Amazon Sellers tend to avoid SBA Loans because the SBA process usually 1. takes much longer than other Amazon Seller Loan options, 2. results in a smaller funding amount than other lenders will offer, and 3. is basically underwritten and secured by the business owners' personal assets and track record.
SBA Economic Injury Disaster Loans (“EIDL”) for Amazon Sellers
During the COVID pandemic, many Amazon Sellers applied for and received Economic Injury Disaster Loans (“EIDL”) from the SBA. In many cases, those loans were for amounts greater than the Amazon Seller needed and the funds were likely not used as required by the SBA.
For example, EIDL proceeds CAN NOT be used as payment of any dividends or bonuses, disbursements to owners, partners, officers, directors, or stockholders, or repayment of stockholder/principal loans. Additionally, these loans prohibit the borrower from completing activities like disbursements to owners for the entire time the loan is outstanding.
EIDL loans are no longer widely available.
To learn about AccrueMe's success-based funding solution for Amazon Sellers, please visit AccrueMe.com