Amazon has selected Goldman Sachs as its banking partner to provide a new digital credit line to its small business merchants in the US, CNBC has reported.
Goldman Sachs’ digital lending brand Marcus will provide the credit lines of up to $1m to those business owners who sell their products on Amazon.com.
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These credit lines will come with a fixed 6.99% to 20.99% annual interest rate. Like a regular credit card, they can be drawn and repaid, the report added.
The credit line runs on a two-week disbursement cycle. Failure to pay the minimum due will result in late fees being charged.
Additionally, there will be a maintenance fee if sellers do not use 30% of their credit line.
Goldman will use the data on revenue and tenure of the sellers with their consent to determine if a seller is eligible for the loans.
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By GlobalDataThis data will also enable the bank to boost its lending models and foray into ‘Main Street’ finance, according to CNBC.
Goldman Sachs US consumer business head Omer Ismail said: “On the one hand, we are a bank with a balance sheet, with the ability to lend, and manage risk effectively. On the other hand, we’re doing this with all the benefits of being a start-up, i.e. no legacy technology, no legacy business models.”
Amazon sellers can see the new offer on Seller Central, an online hub for merchants on Amazon.com.
Amazon was initially eyeing the creation of an online marketplace where Goldman Sachs would compete with other lenders to offer the credit line.
However, the e-commerce giant decided to work solely with Goldman Sachs. This is said to be the first time an outside lender would lend to its sellers.
The credit line is expected to help sellers avoid cash crunch during peak time and offer the required flexibility to buy more inventory.
In a statement, Amazon lending head Ragui Selwanes said: “Our team exists to fuel seller growth, period. Marcus is the right partner for us because they share this commitment.”
