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  1. #1
    Senior Member Reputation points: 51397 DTFdowntofund's Avatar
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    Amazon. Is nobody talking about this yet?

    1 billion already in the small biz lending space in 2018. I just ran across this on debanked a minute ago, but its come up in conversation over the last few weeks.

    http://https://debanked.com/2019/05/...united-states/

  2. #2

    Amazon. Is nobody talking about this yet?

    the man that owns the washington post also does merchant cash advances. Only in America! Go POTUS! Trump 2020

  3. #3
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    You can't apply to Amazon loans. You must be selected. It works similar to a CC split, in that they take out of the Amazon sales. It's also revolving, and they take the inventory as collateral (I've seen the UCCs). It's only offered for Amazon stores, they're not expanding offering it to most of our clients.

    It's FAR cheaper than MCA, and I think it's actually structured as a loan with APR and monthly paybacks. Terms are just shorter, and they offer more money quickly.

  4. #4
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    Every major corporation in the US with a giant balance sheet offers some type of financing to their vendors. It is smart for Amazon to do this as they can make a return on cash when their vendors need cash flow that necessarily qualify for bank financing. Amazon terms with vendors are typically N30. Small emerging vendors selling to Amazon directly or through their sites benefit from these programs as it can greatly help with cash flow.

    Other companies offering vendor financing programs include AT&T and WalMart. Some of these large companies have stretched payment terms from N30 to N60 or N90 to vendors. They then offer N10 or N15 for a 2-3% discount on the invoice. In essence they are factoring their vendors. Most wind up paying in 30 days so the vendor wound up back where they started and paying a discount. You will see more and more of this. Most large banks offer payables programs for their large customers. They basically pay the vendors in 5 days and let the corporate customer pay them in 30-60 days. Again, they are charging the large corporate customer's vendors a fee for this service. A lot of small vendors take these programs because cash is king! There is a better way....

    We run into the discount for early pay all the time. We can offer much better rates and the funds are available withing 24hours.....not 10 or 15 days. I just closed a factoring facility for a company who had two large customers stretch terms from N30 to N90, buy offered a 3% discount for N15. We offered a much better alternative.

    Best,

    KH
    Hedley Lamarr......That's Hedley

  5. #5
    Senior Member Reputation points: 51397 DTFdowntofund's Avatar
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    PayPal had a lot of momentum in this arena too in the last year or so. & accurate, the structure of the products / cost of cap is hard to hold a candle to... but they'll never fully embody the spectrum of ability that alternative lenders offer. At least not yet.

  6. #6
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    John Deere is the #1 financier of farms in America
    https://debanked.com/2019/05/so-god-...ing-the-farms/

  7. #7
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    The difference between PayPal and Amazon: Amazon has more of a captive client/vendor. As does WalMart. Both have access to very low cost of capital.
    Hedley Lamarr......That's Hedley

  8. #8
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    Three years from now all US companies will be bought up and merged into just two companies: Amazon and Yellowstone.

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    Amazon is taking extremely conservative approach to lending. I've spoken with them and they were very clear that the mandate was to have an extremely low default rate. $1 billion is just the tip of the tip of the iceberg.

  10. #10
    Senior Member Reputation points: 51397 DTFdowntofund's Avatar
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    Quote Originally Posted by Jess View Post
    Amazon is taking extremely conservative approach to lending. I've spoken with them and they were very clear that the mandate was to have an extremely low default rate. $1 billion is just the tip of the tip of the iceberg.
    Agreed.. goes without saying. This is a powerhouse, a beast.. they put Toys R Us out of business, and I'm sure countless other solidified entities due to the niche they've established. At the end of the day... you assume risk with consequence, primarily off your ability to sustain loss. But when you have a conglomerate with little to no possible chance of bottoming out, you see rates and maneuverability that's beyond anyones capable criteria. From a logistical standpoint, they're at the top of the food chain with the ability to participate as desired with sure-fire winning results simply because they A) can still narrow their parameters and UW box to a place where they can realistically choose to only take on volume that is reasonably low risk, but also (which, I'm sorry.. I love our space and I've been in it creeping on 10 years) but the simple fact that Amazon is a household name, regardless if anyone uses them or not, the reputation and familiarity of their brand will get them to places no one in MCA can.

    Dont get me wrong.. I'm not advocating that this somehow is detrimental to our space (which has already been muddied up and over saturated since 2016 IMO) because their range cannot cover the plethora of necessity and product that spans our industry. But again.. all things considered, it's something to think about.

  11. #11
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    Quote Originally Posted by WestCoastFunding View Post
    Three years from now all US companies will be bought up and merged into just two companies: Amazon and Yellowstone.
    Please save me some !
    Marcus Clapman | Business Development | Cresthill Capital
    (High Commissions Payout Group)
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    Tel: 917-521-6528 | Fax: 212.671.1473
    Email: bizdev@cresthillcapital.com
    http://www.cresthillcapital.com

  12. #12
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    Quote Originally Posted by abfunders View Post
    You can't apply to Amazon loans. You must be selected. It works similar to a CC split, in that they take out of the Amazon sales. It's also revolving, and they take the inventory as collateral (I've seen the UCCs). It's only offered for Amazon stores, they're not expanding offering it to most of our clients.

    It's FAR cheaper than MCA, and I think it's actually structured as a loan with APR and monthly paybacks. Terms are just shorter, and they offer more money quickly.
    correct i know someone that got 8% apr on his second loan with them (first was 14%) Now when he asked for more money based on total amount he does as a company (does 300k a month with them 1.2 mil a month total) they couldn't care less about the total gross . it only goes by what he does with them and that they have control of inventory . bottom line he got 250k on a 12 month 8% apr with out submitting financials or even a bank statement

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    Quote Originally Posted by Michael I View Post
    correct i know someone that got 8% apr on his second loan with them (first was 14%) Now when he asked for more money based on total amount he does as a company (does 300k a month with them 1.2 mil a month total) they couldn't care less about the total gross . it only goes by what he does with them and that they have control of inventory . bottom line he got 250k on a 12 month 8% apr with out submitting financials or even a bank statement
    Yep- Pretty decent deals they are offering their vendors. The have security in all their inventory at Amazon and I am sure they have security held at the vendor's warehouse. A bunch of the vendors fulfill store sales from their warehouse. Inventory purchased directly by Amazon is held at Amazon. Is a deal goes sideways...Amazon just stops payment on all existing AR and sells off all the inventory.
    Hedley Lamarr......That's Hedley

  14. #14
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    The model only works for them because of a few reasons:

    (1) Captive audience, nearly 0 acquisition cost
    (2) Large base of cheap capital available
    (3) Collateral
    (4) Add-on benefit of working capital to scale core sales on their platform

    Amazon may choose to go larger in the future but for the foreseeable future this is really only a model that works for their core merchant base

  15. #15
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    Correct! Their model is limited to their internal vendor base which includes every small manufacturer/distribute and their Uncles, cat, ferret, and flying squirrel.
    Hedley Lamarr......That's Hedley

  16. #16
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    Amazon will buy acquire companies to expand their reach beyond smbs on their platform, like Square bought Weebly and Paypal bought Swift. Shopify acquisition makes sense

  17. #17
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    Quote Originally Posted by rhum2016 View Post
    Amazon will buy acquire companies to expand their reach beyond smbs on their platform, like Square bought Weebly and Paypal bought Swift. Shopify acquisition makes sense
    Why-they have a massive captive audience. The next step would be to offer the financing product to vendors of Whole Foods if they are not doing that already or offer corporate credit cards to small businesses that frequently buy products from Amazon.
    Hedley Lamarr......That's Hedley

  18. #18
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    Obviously they have a massive audience, ive sold stuff on amazon, but if those small bizs that are buying from them already have shopify website, a square payment account, or a chase business bank account, they already get offers on mcas or loans.
    How many vendors of whole foods are there? Not a relatively large amount id think.
    Credit cards maybe but they are a different product, im talking just mcas.
    Also, look another partnership... https://www.prweb.com/releases/u_s_o...eb16304962.htm

  19. #19
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    Next time you are in Wholefoods look and see how many emerging packaged consumer products that are on their shelves........thousands.

    The US Bank deal is similar to what other banks are doing with the larger advance companies. He's a slug of my cheap balance sheet....please offer advances to our customers who don't qualify for traditional loans with us.

    Large companies and banks are going to find ways to grab customers and deploy capital. The ones that have massive balance sheets and captive customers will do quite well.

    FYI.... Seacoast Business Funding was First Growth Capital division of First Capital. The bank acquired us in early 2015. Why? It gave us a great partner with a massive balance sheet and cheap cost of capital. It also gave us a captive audience from one of the largest banks headquartered in Florida. For the bank....it gave them entry into the non-bank finance arena to offer clients working capital solutions they would otherwise turn away.
    Hedley Lamarr......That's Hedley

  20. #20
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    Quote Originally Posted by kevinhenry0527 View Post
    Next time you are in Wholefoods look and see how many emerging packaged consumer products that are on their shelves........thousands.

    The US Bank deal is similar to what other banks are doing with the larger advance companies. He's a slug of my cheap balance sheet....please offer advances to our customers who don't qualify for traditional loans with us.

    Large companies and banks are going to find ways to grab customers and deploy capital. The ones that have massive balance sheets and captive customers will do quite well.

    FYI.... Seacoast Business Funding was First Growth Capital division of First Capital. The bank acquired us in early 2015. Why? It gave us a great partner with a massive balance sheet and cheap cost of capital. It also gave us a captive audience from one of the largest banks headquartered in Florida. For the bank....it gave them entry into the non-bank finance arena to offer clients working capital solutions they would otherwise turn away.
    slow down with the obvious comments, I said relatively, so how many smbs in the country, millions.
    as to audience, you are making my point, amazon bought whole foods for certain strategic reasons and will do so on the lending side. you want to debate how they will do it go ahead, no one is right until it happens, its my opinion based on what im seeing and hearing.

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