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Amazon Suspends Merchant Loan Repayments Due to Coronavirus

By Danny Vena - Mar 26, 2020 at 12:15PM

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Borrowers get some much-needed relief from the e-commerce giant. (AMZN -2.78%) announced on Wednesday that it was pausing the repayment of loans by sellers on its marketplace due to the disruptions caused by the novel coronavirus pandemic.

The e-commerce giant has historically provided working capital loans to merchants of between $1,000 and $750,000 via its Amazon Lending program, which has offered terms of between three and 12 months, with interest rates ranging from 6% to 19.9%. Repayment of those loans will be paused, effective immediately, with the delay currently scheduled to last until April 30.

Woman signing a contract.

Image source: Getty Images.

"Loan repayments will restart on May 1, 2020 ... You will have the same number of remaining payments once repayment resumes," Amazon said in a message first reported by Reuters. 

Amazon announced just last week that it was suspending all shipments of non-essential items to its warehouses and fulfillment centers, in order to prioritize much-needed consumer staples and medical supplies. The company has seen unprecedented demand for these items, as many shoppers face stay-at-home orders and are forced to shelter in place, making trips to a grocery store only when absolutely necessary.

This left many sellers in the lurch, the result of supply-chain disruptions and the temporary moratorium on storing products in Amazon's warehouses, with many merchants wondering how they would repay these loans to the company when they couldn't generate sales.

Amazon has taken a number of steps to deal with the unparalleled demand. Last week, the company temporarily shuttered its Prime Pantry nationwide. The service -- which allows Prime members to have regular deliveries of common household items and packaged groceries -- was closed as the result of "high order volumes"; Amazon faced shortages of the most popular products. The company also plans to hire as many as 100,000 delivery and warehouse workers to help meet the demand.

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