In the American Prospect, ILSR Legal Fellow Shaoul Sussman explains that it is almost impossible for small businesses selling on Amazon’s platform to borrow from private banks, forcing entrepreneurs to borrow from Amazon itself.
“Small businesses that transact on Amazon’s e-commerce platform are unable to apply for [bank] loans, and instead must rely on alternative sources of financing that are more expensive and less favorable. The reason is quite simple. Sellers that use Amazon’s fulfillment services have to ship their goods in Amazon’s warehouses, where they are stored before they are sold on the platform. After the goods are shipped into those warehouses, sellers are no longer able to access them. Amazon does not allow third-party sellers into their warehouses, nor does it allow access to any other third parties such as creditors and banks.”