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In his shareholder letter 2yrs ago, Amazon CEO Jeff Bezos said he was looking to team up with banks that could help his company expand its lending program for small businesses. Amazon Lending, which launched in 2011 has now chosen to partner with Bank of America. Partnering with B of A allows Amazon to reduce its risk and provides access to capital. A good reminder that running a great lending business is hard.
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.
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