March 27, 2017

By Bob Coleman
Editor, Main Street Monday

Main Street Monday — Amazon and Paypal Main Street Lending Almost at $1 Billion Portfolio Balance

Last year Amazon Lending’s outstanding loan balance hit $400 million. Paypal’s small business lending balance exceeds $550 million.

Amazon’s loans are on an invite-only basis to its merchants to “obtain funding more quickly than they would through a bank or traditional lender.”

Of course interest rates hover around 15%

Writes Jeff Bezos in his annual shareholder letter.

“We also created the Amazon Lending program to help sellers grow. Since the program launched, we’ve provided aggregate funding of over $1.5 billion to micro, small and medium businesses across the U.S., U.K. and Japan through short-term loans, with a total outstanding loan balance of about $400 million.

“Stephen Aarstol, surfer and owner of Tower Paddle Boards, is one beneficiary. His business has become one of the fastest-growing companies in San Diego, in part with a little help from Amazon Lending.

“Click-to-cash access to capital helps these small enterprises grow, benefits customers with greater selection, and benefits Amazon since our marketplace revenue grows along with the sellers’ sales.

“We hope to expand Amazon Lending and are now working on ways to partner with banks so they can use their expertise to take and manage the bulk of the credit risk.”

PayPal’s similar program has $558 million in outstanding loans with annual percentage rates up to 25%.