Alibaba.com is launching a financing option for American small businesses. The international business-to-business e-commerce marketplace is allowing qualified buyers to pay for orders up to 60 days after receiving the invoice. 

“Before today, the overwhelming majority of cross-border trade between small companies required full payment up front,” said John Caplan, president of North America and Europe for Alibaba.com, during a webinar hosted by the company. “Small businesses couldn’t benefit from the global supply chain or financing programs that larger competitors frequently enjoy.” 

The new financing option, called “Payment Terms,” comes at a time when many American SMBs are losing revenue due to the COVID-19 pandemic. Alibaba.com believes its 60-day option can alleviate cash flow problems for SMBs banks can’t reach. 

The company didn’t give specifics on the payment terms, but Caplan said in general they will vary and be determined by the buyers’ activity on the platform. According to Alibaba.com, buyers will place an order, create a contract with the seller and make an initial payment. The buyer then receives an invoice with the terms and can pay up to 60 days later.  

Necia Boston, founder of the cosmetics company B.A.A.B.S. and an early applicant to Payment Terms, has used Alibaba.com since 2017. She said the pandemic has forced her company to close its brick-and-mortar location in Greenville, N.C., cutting the company’s income in half. According to Boston, Payment Terms has helped the company when its cash flow has been limited. “We’ve been able to go forward and look for a future after we come out the other side,” she said. 

Alibaba.com launched in 1999, and is the original business line of the Alibaba Group, Jack Ma’s Chinese multinational company that includes Ant Financial and Taobao. Alibaba.com has more than 10 million buyers on its platform and processes more than 300,000 inquiries every day. According to the company, it has seen trade volume growth of more than 85% since the start of the COVID-19 pandemic, and the global B2B e-commerce space is a $23.9 trillion opportunity. The platform opened to U.S. sellers in July 2019. 

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In addition to Payment Terms, Alibaba.com announced today it is launching Alibaba.com Freight, an air and ocean shipping management platform. The platform is also rolling out a series of digital trade shows to connect buyers and sellers. According to the company, it will feature 20 industry-specific trade shows over the next 120 days.  

Peter Wannemacher, principal analyst at Forrester Research, said Alibaba.com is in a good position to offer financing because the company has a deep understanding of the SMBs that use its platform. Although banks probably won’t lose loan customers to Alibaba.com, according to Wannemacher, lending products from nonbanks could make banks less relevant in the SMB space. “Banks should be worried, but it will not play out as a simple replacement,” he said.