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  1. #1
    FUND IT! Reputation points: 2147483647 Sean Cash's Avatar
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    Exclamation Amazon's new Merchant Cash Advance (merchant financing) Program

    Are we on the verge of a small business financing bubble? Everyone suddenly thinks they're a lender. Amazon has joined the space with an effective 13% APR program.

    http://www.reuters.com/article/2012/...88Q1CC20120927

    "Amazon is lending up to $800,000 to some merchants."

    The terms have some pretty interesting fine print, such as if your sales drop by 50% in any given month, you're automatically in default! Check it:

    ……..
    (iii) your gross merchandise sales on Amazon.com as reported in your Seller Account (“GMS”) in any month is less than 50% of your lowest GMS on Amazon.com in any of the prior 12 months,

    (iv) the collective value of your units stored in Amazon fulfillment centers in the US, based on your list price of those units on Amazon.com, (“FBA Inventory Value”) in any month is less than 50% of your lowest FBA Inventory Value in any of the prior 12 months,

    Except as otherwise required by applicable law, if you are in default, subject to any right you may have under applicable law to receive notice of and to cure such default, you agree that we may in our sole discretion exercise any remedy available to us at law or equity or take any or all of the following actions: (I) declare the unpaid balance of your Loan to be immediately due and payable, (II) enforce our rights as a secured party by directing Amazon Services LLC to reserve, hold, and pay to us an amount up to the unpaid balance of your Loan from your Seller Account disbursements until the unpaid balance of your debt under this Loan Agreement is paid in full, (III) enforce our rights as a secured party, by taking possession of your units stored in Amazon fulfillment centers and disposing of them in accordance with the Uniform Commercial Code,……………..

    If this Loan Agreement is referred to an attorney (who is not our salaried employee) to collect the amount you owe or otherwise enforce the terms of this Loan Agreement, you agree to pay our reasonable attorneys’ fees, court costs and other costs of collection to the fullest extent not prohibited by applicable law.

    6. Financing Statements. You authorize us to file and, as we may deem necessary or desirable, to sign your name on any documents and take any other actions that we deem necessary or desirable to ensure that our security interest in any item of inventory or your Seller Account is properly attached and perfected.
    Last edited by Sean Cash; 02-26-2013 at 04:10 PM.

  2. #2
    i like the bubble insinuation. I think you are on to something there. it really does seem like every company thinks they're a lender now. they're all patting themselves on the back for doing 12%-13% apr loans. perhaps there will come a time soon when companies like amazon will learn they should've stuck to the script.

  3. #3
    Amazon and Jeff Bezos have zero interest in profiting from this new product. There is a meta strategy Amazon is deploying for the long-term that involves it becoming the "internet of things." Essentially, every piece of data Google or FB is not privvy to, Amazon wants for use as leverage. They release lots of products based on razor thin margins for that reason. They've been selling the Kindle at a near net loss to sell you software.

    To me, this product release seems to be a set up for a larger move. Gee, I wonder what sorts of products they could release / create using all that sales / merchant data they might not have otherwise had? Hmmm...

  4. #4
    Veteran Reputation points: 107311 Chambo's Avatar
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    Not to mention...lock in merchants

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