Amazon won't require sellers to repay loans for 1 month, easing the pressure on merchants squeezed by the coronavirus outbreak

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Amazon won't require sellers to repay loans for 1 month, easing the pressure on merchants squeezed by the coronavirus outbreak
Amazon fulfillment centre box

REUTERS/Shannon Stapleton

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  • Amazon told sellers in a note that it's pausing requirements on loan repayments for a month.
  • The move could provide relief to sellers who borrowed money from Amazon and whose sales have taken a hit amid the coronavirus outbreak.
  • Amazon also appears to have scaled back its loan offers in recent weeks.
  • Some sellers are complaining about Amazon's unresponsiveness to lending inquiries.
  • Visit Business Insider's homepage for more stories.

Amazon is temporarily suspending requirements on loan repayments from its sellers, a move that could help merchants who borrowed money from Amazon as they deal with unpredictable sales amid the coronavirus pandemic.

In a note to sellers on Wednesday, obtained by Business Insider, Amazon said it will pause repayments and interests on seller loans for a month. Loan repayments will restart on May 1, it said.

"Effective March 26 through April 30, 2020, we will be pausing repayments on your outstanding loan with Amazon Lending," the note said.

The note said that the loans will not accrue interest during this period and sellers will have the same number of remaining payments once repayment resumes in May. Amazon's representative confirmed the note in an email to Business Insider. Reuters earlier reported on the change in policy on Wednesday.

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The one month reprieve will offer relief to some sellers who borrowed money from Amazon's lending program, as their sales have taken a hit in recent months following the coronavirus outbreak. Amazon lent money to more than 20,000 third-party sellers since the launch of the lending program in 2017 and has $863 million in outstanding loans, according to its filing.

Amazon loans range between $1,000 to $750,000, and come with lower-than-average interest rates. Amazon has previously said the goal is to help sellers gain easier access to cash and to buy inventory.

Scaling back

Meanwhile, Amazon appears to be scaling back its lending offers as well.

A group of sellers told Business Insider in recent weeks that the loan offer that typically shows up in the company's seller platform has disappeared. Amazon loans are invite-only, as the company determines the size and terms of the loan based on the seller's performance on Amazon's marketplace.

One seller, who had a loan invitation worth $180,000, told Business Insider that the offer is no longer available. This person said the offer disappeared this week as he was considering taking it to prevent a cash shortfall amid the coronavirus. Amazon didn't respond to this person's request for an explanation.

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The Amazon lending team's unresponsiveness seems to be a wider, more general problem. In Amazon's seller forum, a group of sellers have written about difficulties getting an answer from the lending team over technical glitches and confusing loan terms.

"Has anyone gotten responses from Amazon lending? I tried to reach out to ask about lending flexibility during this time and haven't heard back for a week," one person wrote in the forum.

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