Amazon Teams With YouLend Amid Tough Borrowing Environment

Amazon has teamed with YouLend to help small businesses in the U.K. gain financing in a tough lending environment.

The partnership between the retail giant and embedded financing platform, announced Tuesday (June 20), gives merchants cash advances linked to their sales, letting them make repayments as they earn.

“The new revenue-based financing model means that merchants can grow their businesses and build-out inventory, secure new equipment or ramp up their marketing with the assurance of transparent and capped rates as well as repayment based on current sales,” Amazon said in a news release provided to PYMNTS.

The program lets businesses apply for funding from £500 to £2 million ($639 to $2.5 million), requiring borrowers to pay a single fixed fee with repayments tied to a percentage of their future sales on Amazon. 

“Repayment is only required when sellers make sales, protecting them during quieter periods,” the news release said.

The release also quotes Raymond Pucci, research director of worldwide consumer and small business lending at IDC, who notes that most “traditional bank lenders have tightened their commercial loan standards, making it more difficult for small businesses to obtain working capital that is absolutely critical for them to operate successfully.”

That’s in keeping with research by PYMNTS, which finds that many small and medium-sized businesses (SMB) are suffering a cash crunch. Roughly 1 in every 4 companies surveyed report having access to more than 60 days of cash, and as many as 17% of these enterprises said they have no cash cushion.

In addition, a recent report by the Kansas City Federal Reserve found a 17.7% decline in lending to small businesses, year over year. And 9% of SMBs reported trouble in securing their most recent loans.

However, not every small business is struggling. As noted here last month, smaller businesses that operate through online channels have access to digital avenues and platforms geared towards eCommerce (and omnichannel commerce) that offer less traditional means of financing. 

For example, Amazon said in a recent small business update that it and its third-party lending partners distributed $2.1 billion to independent sellers in 2022, a 50% increase over the previous year. And during earnings season, Shopify said it had extended $477 million in merchant advances and loans during 2023’s first quarter, with fourth quarter activity showing that merchants got $324 million in loans, a 21% increase over the same quarter last year.