Amazon on Tuesday, June 20, announced the beginning of cooperation with the YouLend embedded financing platform.

The purpose of this partnership is to provide small business representatives in the UK with access to financing in conditions of difficulty obtaining credit funds. As part of the cooperation between the e-commerce giant and the embedded financing platform, British sellers will be able to receive cash advances tied to their sales. As a result of the implementation of this solution, clients will make payments as soon as they receive the necessary funds.

Amazon’s press release contains information that the revenue-based financing model provides small businesses with the opportunity to expand the scale of commercial activities and increase inventory, buy new equipment, and launch new marketing campaigns, being confident in transparent and limited rates. Also, in this case, repayment is guaranteed based on current sales volumes.

Within the framework of the cooperation program, companies can apply for funding, the amount of which ranges from ￡500 to ￡2 million (from $639 to $2.5 million). In this case, the consumer must pay a single fixed fee, which is tied to a percentage of future sales on Amazon. The e-commerce giant’s press release indicates that the need for repayment will arise only when merchants make sales, protecting them during quieter periods.

Raymond Pucci, research director of global consumer lending and small business lending at IDC, says that currently most traditional lenders, which are banks, are implementing a tightened policy of providing financing for commercial consumers. According to him, this situation significantly complicates the ability of small businesses to obtain working capital, which is necessary for successful activities.

Industry research suggests that many small and medium-sized businesses are facing a cash shortage. In the US, approximately 25% of companies have access to cash for more than two months. At the same time, 17% of enterprises do not have a cash cushion.

A recent report by the Federal Reserve System of Kansas City showed a decrease in lending to small businesses by 17.7% year-on-year. This report also contains information that 9% of small and medium-sized enterprises have encountered problems securing their last loans.

At the same time, companies that operate through online channels have access to digital platforms focused on e-commerce.

Amazon and its third-party lending partners distributed $2.1 billion to independent sellers last year. This figure is 50% higher than the result of similar activities in 2021. Shopify provided advances and loans to sellers for $477 million during the first quarter of 2023.

As we have reported earlier, Amazon Pay Adds BNPL Option by Affirm.