Amazon.com Inc said on Wednesday that it would not temporarily require sellers in its market to repay the loans it had made as traders face the prospect of declining sales during the pandemic of coronavirus. The world’s largest online retailer has informed sellers that its program known as Amazon Lending will suspend refunds from Thursday until April 30.
The program has offered money ranging from $ 1,000 (846.5 pounds) to $ 750,000 to traders looking for capital to acquire inventory, expand their product lines, and advertise on Amazon.
“The loan repayments will resume on May 1, 2020 … You will have the same number of payments remaining once the repayment resumes,” Amazon said in a message to the seller obtained by Reuters.
More than 20,000 merchants have obtained loans from Amazon, the company said in 2017. By the end of 2019, Amazon was expected to receive $ 863 million from sellers to whom it had financed through the loan program, according to a file in the society. Loan terms range from three to 12 months, with interest rates of 6% to 19.9%.
As Americans turn to quarantined online shopping, many online sellers, who are small and medium-sized businesses, face cash constraints due to supply chain and logistics problems caused by the ‘epidemic. EBay Inc., another large online marketplace, said on Wednesday that it would defer most merchant sales charges for 30 days.
Amazon’s offering could ease sellers, some of whom may be hard hit by Amazon’s recent decision to restrict its delivery services in the U.S. and Europe to household, medical, and other essentials during the epidemic .
Merchants of popular goods, from toys to clothing, fear that a temporary ban on storing goods in Amazon’s warehouses, on which they depend for delivery, would lead to low sales and difficulty repaying loans.
Jamison Philippi, an Amazon toy and video game vendor in Hackensack, New Jersey, had estimated Reuters that his revenues could drop by 75% just as he received a loan of about $ 3,500 owed to Amazon on April 1 .
“It’s super great. I applauded when I received this email. It relieves a lot of stress right now,” said Philippi.
Amazon’s decision came after at least one competitor offered relief to sellers.
Ricardo Pero, CEO of loan company SellersFunding, told Reuters last week that he was easing conditions to help sellers on Amazon and other markets navigate the rapidly changing retail market. SellersFunding offers lines of credit and term loans to new and existing borrowers. Both products offer an interest period of only 90 days.
Amazon, which had gained customers by continuously speeding up shipments over the years, has now slowed delivery to a few weeks in some cases in order to manage a flood of orders. It could also dampen merchant sales, as buyers are looking for goods elsewhere.