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Amazon has partnered with Bank of America for its lending program: Sources

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But even with the Bank of America deal, Amazon Lending has been tapping the brakes on growth of late. After almost doubling to $661 million in 2016, outstanding loans just barely increased last year to $692 million, according to Amazon’s annual report earlier this month.

One person familiar with the program said there was a deliberate effort by Amazon to slow the expansion in 2017 as the company attempts to better understand the credit risks that come with a large-scale lending practice. The total staff size was also reduced as the team scaled back its customer outreach efforts, the person said.

Another source involved with Amazon Lending said the slowdown is not surprising because the team has always taken a measured approach to growth. For example, there’s never been a public website to promote the lending service, and it still remains available only to top Amazon sellers that need additional financing. The program is not oriented around making money from interest payments, but to support merchants selling on Amazon’s marketplace and to boost Amazon’s overall sales growth, this person said.

Amazon indicated in its 2016 annual report, published a year ago, that it received a $500 million revolving credit facility from a “lender” in October 2016. The company said in its latest annual report that the facility was raised to $600 million “and may from time to time increase in the future subject to lender approval.”

Sources said the lender referenced in the filings is Bank of America.

An Amazon representative declined to comment and Bank of America didn’t respond to a request for comment.

Amazon Lending isn’t the best bet for many businesses once they’ve matured, especially as competition emerges from companies including PayPal, Square and Kabbage. One source with knowledge of Amazon Lending said annual rates typically range from 6 percent to 14 percent.

Stephan Aarstol, the owner of Tower Paddle Boards, was mentioned in Bezos’s 2016 letter as having one of the fastest growing companies in San Diego, “with a little help from Amazon Lending.” But Aarstol said he no longer borrows from Amazon, which charged him between 11 percent and 13 percent annually, because his company has grown big enough to get more attractive rates elsewhere.

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