Lending is not a new business for Amazon, but it is not a burgeoning business…yet. Last year the Financial Times shared details on their offering and how growth had stalled. Amazon has been lending to small businesses since 2011. Outstanding loans nearly doubled between the end of 2015 and end of 2016 to $661 million but growth was just 4.7% the following year. Growth in 2018 was a mere 2.6% which is at least partially attributable to the company taking a careful approach to lending. Loans were offered at interest rates from 6% to 17% to small businesses selling on the platform.
The FT suggested that Amazon was slated to grow going forward, hiring both in Europe, Asia and in Seattle. Besides sharing data as part of their annual report, Amazon is secretive on future plans.
Now Amazon is reportedly going to be working with Goldman Sachs on their small business loans. According to sources as reported in a CNBC article, Goldman has been working on software which would allow them to simply plug into Amazon’s current loan platform. Last week Goldman was also in the news holding their first ever investor day which included their ambition to be a banking as a service provider and this might be the latest example of that. Many are aware that Goldman Sachs already powers the Apple Card which was released last year. Bank of America was also once involved in Amazon’s small business lending operation.
Not surprisingly representatives from both Amazon and Goldman declined to speak on the topic, but if the partnership comes to fruition it is going to be interesting to see how Amazon lending scales from here. Amazon has also been reportedly working on a checking account which we haven’t seen hit the market yet.