For those who do not know, Amazon will loan money to your business if you meet certain requirements. You can read this post if you would like more information on the program.
Here is my point on why you should not borrow from Amazon for your business needs:
If Amazon is willing to loan you money, there is a 99% chance your bank will too. The main difference is that Amazon requires the loan to be paid back in full within 6 months and the money is used only for inventory. And if you do not pay them back, they will hold your FBA items hostage.
A year before I got approved by Amazon, my local bank that I used gave me a $5,000 line of credit. The next 3 months the bank manager wanted it upgraded to 50k unsecured. He told me they would give me 100k, if only I personally guaranteed it.
Borrowing the money from Amazon was a bad decision I made. They gave me so much money and I had to repay it back so soon, I wasted about 20k on products I would have not bought otherwise. It was the Christmas shopping season so I had used the money to buy almost 30,000 cell phone cases to sell on Amazon during that season.
The bank loan would have been 10x better for me. I would have only spend a tiny bit of it per month. This reminds me of that season from HBO’s Silicon Valley: