SellersFi, a global e-commerce financing and financial services company, is partnering with Amazon Lending to offer eligible sellers credit lines of up to $10 million, the companies announced Tuesday.
CEO and co-founder Ricardo Pero said the credit lines are targeting larger sellers with revenues of $2.5 million per year, or more, that are looking to scale up.
“Banks are very competitive in pricing, but they have limited resources to properly evaluate this industry,” noting that its cash-flow-based underwriting system can get businesses set up with credit lines in as little as 72 hours.
Amazon Lending offers eligible sellers financing options, including term loans, lines of credit, and merchant cash advances. SellersFi is one of four third-party partners offering credit products to sellers, including Marcus by Goldman Sachs, Parafin, and Lendistry.
The SellersFi credit lines are offered through Citi, which, with asset manager Fasanara Capital, led a $300 million credit facility for the company. However, the tech provider clarified that Citi has no relationship with Amazon Lending.
Small businesses have long faced difficulties securing financing from banks, but e-commerce businesses can face added hurdles because of their non-traditional business models, Pero said.
“They can underwrite a bakery the same way they will underwrite an e-commerce business,” he noted. “One has a brick-and-mortar facility with rent or mortgage to pay, heavy headcount costs and so on. The other one has no physical assets apart from the inventory they hold with Amazon.”
SellersFi, a seven-year-old Weston, Florida-based company formerly known as SellersFunding, has focused on the cash management and financing needs of e-commerce companies. With financing linked to anticipated sales, sellers can prepare for forecasted demand cycles throughout the year. SellersFi offers avenues for non-U.S.-based sellers who have U.S. subsidiaries to access financing. That’s a client group that might experience difficulties accessing credit from U.S. banks.
Pero said its clients seeking funding through the Amazon Lending program are typically larger small businesses looking to grow quickly. Many have revenues of more than $10 million per year and have already secured SBA loans.
In recent months, a higher cost of capital due to high interest rates, along with softer consumer demand, has prompted sellers to be more conservative about borrowing activity, Pero said. Clients tend to withdraw 20% to 30% of the available credit amount, with two to three draws throughout the year, he noted.
The company plans to grow its product offerings for sellers, including business checking and savings accounts offered through a yet-unnamed banking-as-a-service partner by the end of the first quarter of this year.
Embedded finance use cases
Bank partnerships with fintechs like SellersFi are opportunities to grow their book of business through embedded finance use cases, said David Morris, a senior analyst at Insider Intelligence.
“It's important for Citi to be able to step in behind the scenes for now, so that they're able to capture that lending business,” he said. “The market is increasingly embracing more of the embedded payments and embedded finance options.”
Meanwhile, for Amazon, the objective might be to encourage sellers to stay in its product ecosystem as competitors — including PayPal, American Express and Shopify — offer financing options for sellers.
“Amazon is going to be bringing on a credit product that can now meet the needs of businesses beyond those that are… the larger businesses within the SMB space, and it's a great place to be able to expand their financial services offerings,” Morris said.
Asked about how SellersFi manages the risks in taking on e-commerce sellers, Pero said the company’s technology toolset is able to keep watch over performance trends over time.
“Our AI, our underwriting process, prevents us from falling into traps,” he said. “There's no one size fits all and we tend to look on a case-by-case basis when things go bad. Having flexible terms and having a frequent dialogue with our clients helps us find solutions when they are under stress.”