Amazon Taps BoA To Reduce Merchant Lending Risk

Amazon is partnering with Bank of America Merrill Lynch to expand its lending program for small businesses.

CNBC reported that the  partnership – revealed by sources who did not want to be named – will allow the eCommerce giant to reduce its risk and provide credit to more merchants.

Amazon Lending is an invitation-only program that offers loans of $1,000 to $750,000, with terms of up to a year, for companies that might have issues getting traditional business loans.

Last year, a former advisor of President Barack Obama spoke on the issue, saying that Google and Amazon are two companies that will bring on the next wave of change in small business lending.

“I think they are going to dominate the market, and that is the next phase that’s coming,” said Karen Mills, Obama’s former small business advisor. “But the question is, in what form would that come and … under what regulatory authority?”

While in June 2017, Amazon revealed it had handed out more than $1 billion in loans, it has recently scaled back on its loan offerings. A source said that the slowdown was intentional, as the company tries to get a handle on the credit risks that come with operating a large-scale lending practice. Amazon even downsized its lending staff as it took a step back from customer outreach.

In its 2016 annual report, Amazon noted it received a $500 million revolving credit facility from a “lender.” Its latest annual report revealed that the facility was raised to $600 million “and may from time to time increase in the future subject to lender approval.” Sources said the lender mentioned in the filings is Bank of America.

There are also reports that lending is likely to pick back up now that Amazon has a banking partner – and the lending team even started sending out a newsletter in November promoting its program.



The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.