Can I borrow from Amazon against my inventory even though I have SBA loan?

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December 31, 2019

by an investor from New York University in St. Louis Metropolitan Area, USA

Amazon will use our inventory that is sitting in Amazon warehouses as collateral but I think the bank also considers our inventory collateral. We cannot borrow more from the bank.

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Reply by a lender
from University of Missouri in St. Louis, MO, USA
Did your lender set you up with any kind of A/R and inventory line at close? If so then they would be able to increase that line. Typically Amazon working capital is pretty expensive compared to bank debt. A line should always be put in place foe just such a situation. Even a small line at close can be increased based on growth. The issue is lien position. If you don't have a line at close, the WC assets will be tied to the SBA loan. If you have a line with 1st position on A/R and Inventory, you have more flexibility. If your lender did this at close you should be able to get an increase.
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Reply by a lender
in Yorba Linda, CA, USA
Sometimes an SBA lender will be willing to split the collateral with another lender, allowing the small business to obtain a line of credit backed by inventory or receivables or both. You'd want to make your case to your lender and ask them to do this for you. Obviously, you want to be sure to show them how this arrangement will be better for the business, allow it grow, etc. If they agreed, they would have to amend their collateral filing to become junior to Amazon on the inventory.
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