Amazon seller loans are a great way to expand your business and increase your working capital. Like most credit, borrowers want to know whether Amazon lending loans need hard inquiries before disbursement. While Amazon lending can benefit your business, you may want to know its impact on your credit report.
Understanding Amazon Lending Loans
Amazon lending loans are short-term loans for small businesses that sell on Amazon. These loans help sellers who want to grow their businesses and improve their cash flow. Amazon makes the loans, but several banks and other financial institutions fund them. They range from $1,000 to $750,000 and allow you to borrow money at a lower interest rate than a credit card. You can use these loans to fund inventory purchases, pay off debt, or cover short-term expenses.
What Is a Hard Inquiry?
When one applies for a loan or credit card, the lender performs what’s known as a “hard pull” on your credit statement from one of the three chief credit agencies. A hard inquiry is simply an inquiry into your credit history. Lenders or potential employers can do this to see how well you have managed your financial obligations in the past. When a person applies for a mortgage or credit, there will be a hard inquiry on their file. These inquiries will appear on your credit report for two years after they occur and can lower your score by about 10 points.
“Soft pulls” only access publicly available information such as your name, address, and employment status. Soft inquiries do not affect your credit score or status in any way. Lenders can make soft inquiries without your knowledge or permission, so you may not even realize when one has been placed against you.
Do Amazon Lending Loans Have Hard Pulls?
Yes, they do. After accepting the terms of the Amazon lending, the lender will check your credit before they disburse money to your account. Hard pulls for Amazon sellers’ loans ensure you can repay the loan and not default on your payments. The hard pulls also determine if you have a good enough credit score (generally 620 or higher) to be eligible for the loan.
How Hard Inquiries Affect Your Credit Report
Hard inquiries occur when lenders review your information to issue new credit accounts, such as a loan application or mortgage application. These inquiries show up as an inquiry on your credit report. Hard inquiries from credit checks or applications for loans or credit cards can affect your credit score by lowering it by 1-10 points for about a year.
The amount of damage depends on how recently you’ve had other types of hard inquiries on your credit report. But in most cases, it will only be temporary. These inquiries do not stay on your report forever — they drop off after 24 months. However, they can still cause harm in the short term. If you have multiple inquiries within a short period, it can make it look like you are applying for too much credit at once. This may lead to lower credit limits and higher interest rates from lenders.
Plan Your Finances Before Seeking Amazon Lending
Before applying for an Amazon lending loan, you should have a plan for how much money you need and when you need it. That way, when it comes time to apply for a loan, you’ll be able to ensure that you can make the payments on time and keep your business running smoothly.
You’ll also need to have a well-thought-out plan for what you will use the money for and how much profit it will generate for your business. Plan out all of your expenses in advance to determine how much money you need in the first place.
Can I Get an Amazon Seller Loan With Bad Credit?
Yes! Many people with bad credit have been approved for Amazon seller loans. This is because the company uses more than just credit scores when deciding on applicants’ credit histories and income levels.
If you have bad credit, you must meet all other requirements including the following:
- You must be an active seller on Amazon who has been selling for at least three months.
- You must have at least $1,000 in sales volume per month during the last 12 months.
- Your account must not be suspended by Amazon or reported as fraudulent by any other third-party agency.
Is Amazon Lending Worth the Hard Pull?
Amazon lending is a fast, easy, and secure way for Amazon sellers to get financing for their business. But is it worth the hard pull on your credit report? Yes, an Amazon loan is worth it. The hard pull will only affect your credit score for a year. After that, it won’t appear on your report unless you default on the loan or request additional funds.
Despite the small reduction to your credit score from the hard pull, you get cheaper credit than a credit card. The benefits to your business will outweigh the temporary slump in your credit score or inconvenience of the hard pull. You will also benefit from discounted financing that other lenders may not offer and no need for collateral or other security.
Alternatives to Amazon Lending
The Amazon lending program is a great way to grow your business and expand your inventory. However, if you don’t qualify or opt against it, there are several alternatives to Amazon lending, though costlier. You can:
- Use a store credit card or personal line of credit instead of funding your inventory upfront.
- Apply for a cash advance from another bank or credit union, which will typically have a lower APR than most business credit cards.
Get Your Amazon Lending Loan Today
If you want to grow your Amazon business, apply for Amazon lending today. The application process is simple and fast, no collateral is required, and you will get funding at an affordable rate. Don’t let hard pulls discourage you. Apply for Amazon loaning and set your business for growth and success.
