Amazon will launch a business loan program in China and seven more countries. (Photo : Reuters)
U.S.-based Amazon.com Inc is set to launch a business loan program in China and seven more countries later this year. The program aims to help small sellers in their positions in the e-commerce market.
Amazon's business loan program is only available in Japan and the U.S. However, with the plan of Amazon Lending, founded in 2012, to offer short-term working capital loans in areas where its third-party, seller-run marketplace is in operations, the program will see expansion in other countries.
Apart from China, the other countries include Canada, India, Italy, Spain, U.K., France and Germany.
The service, however, is not open to all sellers on the firm's online platform and will be provided via an invite-only basis.
Currently, credit has become a key factor in the competition among new vendors and veteran players in the market. Other huge firms such as eBay Inc.'s PayPal and Alibaba Group Holding are also seeking credit services in beefing up their vendor base.
For some lending industry officials, these retailers are venturing on risky loans, as they are unaware of the shape of the credit market where the sellers operate.
According to William Black, a former U.S. banking regulator and a University of Missouri Economics and Law professor, small businesses have seen high failure rates, especially in India and China.
Amazon stated that its loan offerings are safe, based on internal data, for it takes loan payments out of the sales proceeds it pays to its sellers. The firm offers three- to six-month loans worth $1,000 to $600,000 to help sellers buy inventory.
