Credit & Capital

Amazon, Goldman to Offer SMB Credit Lines

In a marriage of tech and Wall Street, sellers on Amazon will be eligible for credit lines of up to $1 million from Goldman Sachs' Marcus brand.
Matthew HellerJune 11, 2020

Amazon is teaming up with Goldman Sachs in a marriage of tech and Wall Street aimed at expanding  Amazon’s lending platform for small businesses.

CNBC reported that small business owners who sell items on Amazon will soon be receiving targeted invitations from Goldman’s Marcus consumer banking brand for credit lines of up to $1 million.

The credit lines will come with a fixed annual interest rate of 6.99% to 20.99% and can be drawn and repaid, like a regular credit card. “The move … is the first time Amazon will let a financial institution make underwriting decisions for the hundreds of thousands of sellers on its platform,” CNBC said.

More than half the goods sold on Amazon are from independent businesses. “Our team exists to fuel seller growth, period,” Ragui Selwanes, head of Amazon Lending, said in a statement. “Marcus is the right partner for us because they share this commitment.”

Since 2012, Amazon has been offering term loans to sellers, using algorithms and closely guarded sales data to make lending decisions. The borrower repays the loans by allowing Amazon to take a chunk of their monthly sales on the platform.

“Amazon Lending has faced some difficulty in recent years, perhaps due to internal cash flow shortages,” The American Prospect recently reported.

According to CNBC, Amazon had considered creating an online marketplace where Goldman would be just one of many lenders competing to offer small businesses credit but that strategy was dropped in favor of working solely with Goldman.

Goldman launched its Marcus business in 2016 to diversify from the capital markets-heavy businesses that generate most of its revenue. In other tie-ups, it partnered with Apple on a new credit card last year and launched an installment loan business with JetBlue in April.

The collaboration with Amazon “is a coup for Goldman Sachs because it gives it access to thousands of Amazon merchants as the New York-based financial services group fuels its push into Main Street finance,” PYMNTS said.

After four years, Goldman’s consumer banking unit has $80 billion in deposits and $7 billion in loans.