Amazon and Lendistry Expand Community Lending Program

Amazon.com Inc. has decided to continue the Amazon Community Lending program, which was launched a year ago, as a long-term offering to help sellers grow. We also partnered with downtown-based BSD Capital Inc. (doing business as Lendistry) to support small businesses with short-term loans.

Since its inception, the program has loaned more than $35 million and plans to lend more than $150 million to US-based Amazon sellers over the next three years. Loans offered by Lendistry range from $10,000 to $250,000 with terms up to five years.

Amazon Sellers, who represent more than half of all units sold on Amazon, are approved for loans through the program and use these funds to grow, build labor and operating costs, inventory, product development, and brand. , manufacturing and marketing efforts to expand its customer base.

Tai Koottatep, director and general manager of Amazon B2B Payments and Lending, said in a statement: “The Amazon Community Lending program not only provides working capital for sellers in socially and economically disadvantaged communities, but also offers one-on-one coaching, educational programs, webinars, and classes to help them reach out to them now and in the future. was developed to support the growth of

The majority of Lendistry’s disbursed funds traditionally go to low- to middle-income communities, minority-owned businesses, and other historically disadvantaged business owners. The program also provides small businesses with access to Lendistry’s resources, including one-on-one consulting, webinars, and on-demand educational classes.

strategic financing

When Rendistry was founded in 2015, the Black-led company was designed with minority business owners in mind.
“When you think about community lending, it’s not a silver bullet, it’s not a silver bullet. You have to have a multitude of products in place to give the community access to capital,” said Rendistry’s CEO. One Everett Sands said: “We are primarily focused on minorities and those struggling to access capital.”

Lendistry provides small business loans, commercial real estate loans, and assistance with government and private programs.

“In general, there is a terminal that businesses are using to improve cash flow and refinance higher debt…and[small businesses]to make tenancy improvements (or) tenant improvements. We have a (revolving) line of credit,” Sands said. “We have an SBA in our company that he can use for business acquisitions, debt consolidation (and) working capital expansion. Sometimes we have special products like Amazon Community Lending.

We will focus specifically on one of our partners to provide their voters with access to capital. “

Sands said Amazon recognizes that it has voters seeking access to capital and needs responsible lenders who understand the technology required to create a streamlined process. rice field.

“What we can do is work with our main technical team, Amazon, to collect data in an automated way and pre-approve those small businesses,” explained Sands. “Once these small businesses are pre-approved on the Amazon Seller Dashboard, they will see pre-approval. With the click of a button, that red button will take them to the lender application screen where they can apply for a loan.” increase.”

Apart from Lendistry, sellers can borrow directly from Amazon Lending or open a line of credit with Marcus by Goldman Sachs.

“But while the seller can control the debt they owe, the real key to partnership is that both the seller and Amazon know that this borrower is dealing with a responsible lender. It’s a lender that offers educational programs, a lender that offers a variety of products, and I think that’s really important,” Sands said.

Sands said the program’s success depends on customer feedback, but more importantly, risk management.

“Are our clients paying us back? It was to start another iteration of procurement,” explained Sand. “So Amazon products don’t require two-year tax returns or four-year tax returns, which is what we do with some of our traditional loans. We leverage data from Amazon, such as time spent on the platform, all of which goes into the “ability to repay” equation. “

Sands added that looking at tax returns and personal financial statements is a good way to determine the right type of loan. However, when it comes to e-commerce borrowers, lenders are better protected by checking the financial status of small businesses instead.
Lenders make money from initial costs and “spreads.”

“For Lendistry, they charge an origination fee…up to 3%. So the spread is the difference between what you borrow and what you lend,” Sands said. “This also includes something called the bad debt reserve, which we set aside for the event that the borrower defaults.”

small and medium enterprises work hard

According to Angela Watts, co-founder of San Clemente-based Slyde Handboards and Amazon seller, the loan program has helped her borrow $29,900 in an efficient manner.

“The great thing about this program is that it just clicks a button. Business owners are very busy and they approve loans based on their sales history and relationship history with Amazon. They can see what our historical data is already, they have all the information about our earnings,” Watts says. “A lot of loan programs are based on your own credit. We went together.”

Watts, who runs a company that sells handboards for bodysurfing, has been an entrepreneur for 12 years and believes that helping small businesses raise adequate capital is good for everyone. He said he believes, adding that he believes government financing, such as that administered by the SBA, is “old-fashioned.” ” and should be remodeled to make it easier for renters to navigate.

“Amazon and Shopify need us to survive,” says Watts. “Hopefully in the next year or two, SBA will embark on an era where small businesses can access capital, but in the meantime Amazon, Lendistry and Shopify are the easiest and quickest options. , it won’t take long.”

Pat Nye, regional director of the Los Angeles Area Small Business Development Center, a government-funded program that provides advisory services to small businesses, said small business owners still face challenges created during the pandemic. said.

“Emergency resources such as (Emergency Injury Disaster Loans), (Payroll Protection Program), Relief Grants during the pandemic have been great and have helped a lot of businesses, but there aren’t that many of those resources right now and businesses are still struggling. I do,” said Nye. “They went from being shut down to now with high interest rates and inflation, so the economic situation hasn’t really improved in a way, or has gotten worse in a way, but there is an urgent need to try to handle it. We don’t have a lot of resources.”

Nye noted that repayment of the EIDL loans will begin soon, but many businesses that had to borrow are not in a position to pay them back.
“It feels like a big hangover is about to happen for those trying to get through the pandemic, but now things really haven’t gotten any better or are getting worse. They have some tough decisions to make.” You’ll have to,” said Nye.

Another key issue facing SMEs is a tight labor market. Nye said companies he worked with found it difficult to find and retain employees.
“The pandemic has significantly increased the number of clients we serve.

Before the pandemic, my area alone averaged about 7,000 clients per year. At the height of the pandemic, we had about 15,000 confirmed cases,” Nye said.

“The other thing I would like to say is that we tend to work with many very diverse communities, and the impact of the pandemic has heightened that. Increases across all different demographics. We saw a lot of growth in communities that were historically underrepresented, some of the changes caused by the pandemic may have boosted some activities and didn’t have the resources they needed. I am very optimistic that we are facilitating the ability to follow up and focus some of our communities.”