Raising Private Capital for Your Next Amazon Business

Nicholas Godwin

April 11, 2022

Amazon has grown in the last 25 years to become an eCommerce behemoth, offering huge room for each seller to succeed. But sadly, only one in 100 sellers is killing it.

As of 2019, approximately 25,000 of Amazon’s more than 2.5 million sellers made over $1 million worth of sales, with 200,000 sellers generating over $100,000—meaning over 90% of sellers make less than $100,000 a year.

Securing funds as an Amazon seller to expand your operations to aim at the $1 million clubs is often challenging, especially from traditional lenders like banks.

So, this article guides you on raising capital from private sources, navigating legal bottlenecks, and leveraging Regulation D’s rule 504 and rule 506 to expedite capital acquisition.

Let’s dive in.

Three Sources of Private Capital for Your Amazon Business

Private capital is a business funding option that comes from sources other than banks, government entities, or the sale of stocks. Most private capital agreements happen as one-on-one transactions between the business and the lender.

Let’s examine three private capital sources for your Amazon business.

Amazon Business Funding from Close Friends and Family

Your family and close friends have a vested interest in seeing you succeed, and you could leverage that to secure additional funds for your Amazon business.

But a survey found that 64% of business founders are uncomfortable asking family and friends for loans, perhaps, because many are often scared of risking personal relationships for a business they are uncertain of its outcome.

However, family and friends remain an established channel for raising quick capital, acting as the first port of call for about 22% of founders.

But the first step to succeeding is deciding how to raise the capital—debts, equity, and gifts.

Let’s explore them.

Debt Capital

In debt capital, you’re taking up a personal loan which is often unsecured and could be an excellent option for a startup without any sales history.

A secured loan is when you offer a valuable asset as a security for the loan repayment. It helps clear doubts on whether you’ll repay the loan or not.

It’s best to draft a loan agreement to straighten out the loan terms, including the interest rate, due date, and default terms.

Secured loans would need extra paperwork. Lenders want to be sure that the property you’re providing as security is safe to use as security.

In Australia, for example, you could use the Personal Property Securities Register to register your security item. You may also draft a Security Agreement to guide how you manage that property and what happens if you decide to sell the property during the loan period.

A secured loan is suitable for scaling your business but might be risky for a startup as it exposes your valuable asset as loan security when you default.

Research found it takes startups two to three years on average to become profitable, meaning you might default if the repayment period is less than two years.

Equity Capital

Private equity is a private funding option that gives part business ownership for an investment.

It’s a great option for Amazon sellers just starting because it gives them access to capital without paying for it, making it less risky than loan capital.

But one disadvantage is that it lets you give away part ownership, but the silver lining is you have someone you can share the business risk with.

Use a pitch deck to make your presentations and take care of your legal with these documents:

  • A Shareholder Agreement that specifies share ownership, issuing new shares, sharing dividends, and resolving disputes.
  • A Share Subscription Agreement or Letter conveying a prospective subscriber’s agreement to offer money in return for equity and the terms.
  • An Intellectual Property Assignment Deed lays out ownership of IP assets.


Raising funds from gifts exempt you from any legal obligations to the lender and could provide complementary capital for your business.

Cornelius McNab, the founder of 40billion.com, which facilitates family and friends loans and gifts, revealed only 10% to 20% of people you asked would contribute. So, you’ll need to reach out to up to ten times the number of people you need to meet your target.

For instance, if you need ten backers to meet your funding target, you’ll need to approach up to 100 people.

Collaboration with Creditors and Suppliers

Besides, family and friends, creditors, and suppliers are other established relationships you could explore for additional funds for your Amazon business.

You could negotiate longer repayment terms with your creditors and suppliers, offer them equity for debt or profit share if you’re not comfortable sharing ownership.

Seek Private Capital from Business Investors

Business investors provide an established channel for scaling your business.

It’s often challenging to secure funding from this channel for startups. Investors are more comfortable investing in existing businesses with high growth potential and monetary returns.

You could explore this option for additional capital if you have an existing business with impressive sales records. But, luckily, most investors don’t request equity or a voice in your company.

We’ll look at the available options, the eligibility terms, and how to apply in detail soon.

Legal and Tax Caveat

This article only provides an overview and should never be a substitute for legal counsel. Talk to your attorney to guide you through the process, step by step.

Securities law restricts how you can solicit capital.

Federal and state laws in the United States require that you register with the Securities and Exchange Commission (SEC). Alternatively, you could apply for an exemption when raising private capital for your business.

So, the first step before diving into raising capital or talking to a prospective investor is to sit down with a securities attorney to prepare the relevant paperwork in compliance with the law and learn the rules of the game.

Legal and Tax Implications for Private Capital Raised from Gifts

Receiving gifts from loved ones comes with a legal obligation.

The law allows you to receive up to $14,000 tax-free gift from one person annually but requires the giver to file a tax return for gifts above the exclusion amount.

For instance, a $20,000 gift requires the giver to file a tax return for $6,000, which exceeds the exclusion amount. Please note that the exclusion amount changes annually, and you can check the IRS website for the current rate.

You can document a gift through a simple letter from the giver explaining that it’s a gift. The giver can keep a copy for tax purposes to assure the IRS that the transfer is not an interest-free loan.

Navigating Regulation D When Raising Private Capital for Your Amazon business

Regulation D lets private businesses secure funding quicker and at a lower cost. It’s an SEC regulation governing private placement exemptions.

The regulation lets small businesses raise capital from equities and debt securities without registering them with the SEC as required by law, making securing funding quicker,

Using the regulation provides you an expedited route to offer securities to raise money, and your investors enjoy the same legal protection as other investors.

Image Credit: Medium

Regulation D offers two rules under which you can raise capital—rule 504 and rule 506, and let’s examine how much you can raise under the rules.

How Much Money Can Your Amazon Business  Raise Under Rule 504?

Rule 504 allows you to raise up to $5 million.

Businesses taking advantage of the rule can offer up to that amount in securities privately in 12 months without registering the placement with the SEC.

The rule doesn’t apply to companies at the development stage without a clear business plan.

How Much Money Can Your Amazon Business Raise Under Rule 506?

Rule 506 allows you to raise an unlimited amount of capital but permits only two scenarios under which you can raise the money.

It stipulates the scenarios in paragraphs b and c of the rule.

  • Rule 506b permits a company to sell its offerings to an unlimited number of accredited investors and up to 35 non-accredited investors.
  • Rule 506c allows businesses to raise capital from only accredited investors.

Raising funds under Rule 506 requires you to file an electronic Form D through the EDGAR database to inform the SEC when you place your offer.

Who Are Accredited Investors?

An accredited investor is an individual investor that’s financially sophisticated and can sustain the risk of loss.

Federal securities laws limit Regulation D investment to accredited investors because they understand the risk of investing in securities and can make informed decisions based on factual information.

To qualify as an accredited investor, an individual investor needs to meet at least any of these criteria:

  • Earns at least $200,000 annual income (or $300,000 with a spouse) in the last two years and expects the same in the current year.
  • Worths at least $1 million alone or with a spouse, excluding the value of the individual’s primary residence
  • Holds Series 7, 65, or 82 licenses in good standing
  • A trust that manages over $5,000,000 in total assets and is not explicitly formed for the offering.
  • Federal securities law also recognizes legal entities with only accredited investors as its shareholders as qualified.

Cost of Raising Money Through Regulation D

Raising money through Regulation D could cost over $25,000, making it excellent for securing millions of dollars.

  • Filing Form D cost between $200 and $400, of course, depending on the state.
  • Legal fees may range from $10,000 t0 $25,000.
  • Rule 506(c) marketing cost for advertising the offering could fall between one and eight% of the allocated offering.
  • The costs of drafting the business plan, creating a pitch deck, and financial projects also add to the total cost.

Business Investors Offering Private Capital for Your Amazon Business

Let’s examine some business investors offering private capital and personal loans to Amazon sellers.


SellersFunding allows Amazon sellers to receive up to $1 million in under 48 hours to drive more sales and increase profitability.

In addition, it can advance you up to 90% of what you made the previous day to cycle back into inventory.

You could invest the advance in advertising to drive in new customers.

Who Needs SellersFunding?

SellersFunding is excellent for Amazon sellers that need flexible and free-flowing working capital to grow their business and a secured platform to pay suppliers in over 180 countries.

Eligibility for SellersFunding

SellerFunding is available to merchants with at least four months of sales history and $3,000 of net sales monthly.

How to Apply for SellersFunding

Sign up on the platform, connect your Amazon store and sign the agreement.

Amazon Lending

Amazon provides working capital loans to help small and medium-sized businesses grow their operations. Amazon Lending makes raising capital seamless, enabling you to focus on growing your business.

The program is invitation-only, and the application is 100% digital.

Who Needs Amazon Lending?

Amazon Lending works for merchants with a steady increase in sales.

Eligibility for Amazon Lending

Amazon Lending is an invitation-only program. You’ll get an invitation in your Seller Central account if you’re eligible. An invitation comes with the maximum eligible amount, interest, expiry date, and application link.

How to Apply for Amazon Lending

Eligible sellers can apply from their Seller Central account.


Clearco, formerly Clearbanc, provides growth capital for online businesses. The company offers equity-free capital ranging from $10,000 to $10 million to founders in any stage of their journey, charging six to 12% flat fee.

Clearco helps you grow your business without giving up equity and control.

Who Needs Clearco?

Clearco is suitable for Amazon sellers that need regular capital for inventory and ads.

Eligibility for Clearco

Only incorporated Amazon businesses are eligible for this funding.

How to Apply for Clearco

Sign up on Clearco and connect your sales account.

Funding Circle

Funding Circle provides multiple funding options to sellers wishing to grow their businesses.

It offers lines of credit, term loans, merchant cash advance, working capital loan, invoice factoring, and SBA loans, giving you the flexibility to choose the option that works best for you.

Funding Circle has supported over 100,000 businesses globally with more than $15.2 billion loans and can offer you up to $500,000 to grow your business.

Who Needs Funding Circle?

Funding Circle is excellent for sellers interested in multiple funding options.

Eligibility for Funding Circle

The funding is available to businesses operating for the past two years, and the business owner must have at least 660 personal FICO credit scores.

How to Apply for Funding Circle

You can apply on the website, and it takes approximately 6 minutes to complete the application.


AccrueMe is an investment and growth partner for Amazon sellers. It aims to help Amazon sellers earn more money by offering them up to $1 million to scale their operations.

AccrueMe doesn’t require monthly repayment but allows you to decide when to pay back, and the investment comes with zero interest rate.

In addition, it lets you retain full ownership of your business.

Who Needs AccrueMe?

AccrueMe works for Amazon Sellers willing to share profits.

Eligibility for AccrueMe

AccrueMe investment is only open to Amazon sellers with at least six months of profitability and $10,000 invested in the business.

How to Apply for AccrueMe

You can register on the website in less than three minutes to get your capital allocation.


Payability empowers eCommerce sellers with frictionless cash flow and working capital. It provides sellers with daily payment and money to grow their businesses.

Amazon sellers can get up to $250,000 capital and with no credit checks.

Who Needs Payability?

Payability is perfect for sellers that need consistent capital for inventory and ads.

Eligibility for Payability

Payability is available to merchants with a minimum three months sales history of at least $2,000 revenue.

How to Apply for Payability

Create an account on the website to begin.

Peer to Peer Lending

Peer-to-peer lending lets you borrow money from individuals willing to invest in qualified applicants, cutting out banks and conventional online lenders. It connects you directly to people willing to invest in your business, eliminating the middlemen.

P2P lending is a good fit if you can’t qualify with conventional lenders.

Peer-to-peer lending websites bring you in contact with the investors and connect you to fund online in a few minutes, and let’s examine the top three.


Prosper is the first P2P lending solution in the United States. It offers quick capital between $2,000 and $40,000 with an APR ranging from 7.95% to 35.99%.

It usually takes five days to receive the fund and comes with a three-or five-year repayment term.

Prosper is best for sellers with established credit history.


LendingClub is an American lending marketplace connecting borrowers to investors. It has helped more than 3 million borrowers secure over $60 billion in personal loans since 2007.

You can borrow up to $40,000 for personal loans and $500,000 for small business loans.

The repayment term for a business loan is between one and five years.


Peerform allows sellers with excellent credit scores to borrow up to $25,000 at an annual%age rate between 5.99% and 29.99%, making it one of the best lending marketplaces with the best rate.

The repayment term is three or five years, and Peerform expects you to have a debt-to-income (DTI) ratio of less than 40%.

Personal Loan

Personal loans provide quick capital to sellers that aren’t eligible to take business loans.

It often requires less documentation, takes few minutes to apply, and you could get credited within a few hours of the loan approval.

However, most personal loans are unsecured, making them come with higher interest rates.

Personal loan credit limit typically ranges from $1,000 to $50,000. But some vendors can give up to $100,000.

Who Needs a Personal Loan?

A personal loan is an excellent funding option for Amazon sellers without an impressive sales history to land business loans or investors.

Eligibility for Personal Loans

Personal loan eligibility is often based on your credit score, debt, and monthly income.

How to Apply for Personal Loans

You can apply on online loan websites likes:

Deciding on the Right Funding Option

Deciding on the right funding option is contingent on whether you’re raising the capital to start a business or scale its operations.

Business savings, unsecured loans, private equity, and capital from close friends and families remain the best personal funding options for new Amazon sellers because of the less pressure securing fundings from those channels.

Besides protecting your assets, raising capital from those channels ensures you don’t harm your personal credit history when you default, creating problems raising money in the future.

Funding from secured loans and business investors provides sustainable options for scaling and growing your Amazon business. You can find the right funding partner by giving answers to these questions.

  • What’s your credit score?
  • What’s your business sales history in the last six months?
  • What do you need the loan for?
  • How much do you need and how often?
  • What APR can you afford to pay?
  • What repayment term is best for you?
  • Which lender offers the type of loan you need?

Wrapping it Up

Growing your business through personal savings is an uphill task.

But you could join the over 25,000 Amazon sellers averaging $1 million sales annually by working with the right funding partners to scale and grow your business.

Only borrow what you need, and avoid slow-moving inventory, or you might default.