SEATTLE–Amazon is partnering with Goldman Sachs to introduce a new digital credit line for U.S.-based merchants.
According to CNBC, which first reported the new offering, small business owners who sell items on the e-commerce giant’s platform will soon be receiving targeted invitations from Goldman’s Marcus brand for credit lines of up to $1 million.
“Potential borrowers will see the offer on Seller Central, the online hub for Amazon merchants and can apply in a simple two-step process, said the people, who spoke on condition of anonymity because they were not authorized to discuss the partnership publicly,” CNBC reported. “The credit lines will come with a fixed annual interest rate of 6.99% to 20.99% and can be drawn and repaid, like a regular credit card.”
According to the report, the move marks the first time Amazon will let a financial institution make underwriting decisions for the hundreds of thousands of sellers on its platform.
“More than half the goods sold on Amazon are from independent businesses. For the past decade, Amazon has kept a tight rein on its small business lending program, using algorithms and closely guarded sales data to determine who could use a loan,” CNBC said.
A ‘Coup’ for Goldman
The report added the move is a coup for Goldman, which is working to expand its ecosystem of partners. Besides offering personal loans and deposits under its Marcus brand, CEO David Solomon said in January that the firm hoped to become a “banking-as-a-service” provider for big corporations. Last year, Goldman helped Apple launch its first iPhone-integrated credit card and followed that with a partnership with JetBlue. The bank also has deals with Intuit and AARP, CNBC reported.
The news outlet added, “By gaining data on thousands of Amazon merchants, Goldman can improve its lending models and accelerate its push into Main Street finance.”
With the latest offering, the application process is fully digital and can be done in minutes, and most customers will get approval results in real time, CNBC said.
“Unlike with other Marcus products, however, there are potential fees. The credit line runs on a two-week cycle, and if users don’t make minimum payments on time, they’ll owe late fees,” the report said. “They’ll also pay a maintenance fee if they don’t use at least 30% of their credit line.”