Kabbage Small Business Lending Review 2020

Overview

Kabbage Funding is an online lender that offers small business loans in the form of short-term lines of credit. Borrowers can receive credit lines of up to $250,000 with repayment terms of six, 12, or 18 months. With their simple, automated application process and flexible requirements, it is a worthwhile option for business owners with poor credit and those who need funding quickly.

Pros:
  • Available to business owners who have declared personal bankruptcy once, as long as one year has passed since discharge
  • Do not consider business credit score
  • One monthly fee that incorporates interest, processing, and underwriting 
  • No prepayment penalty
  • Can get funding on same day you apply
  • Mobile app
  • Simple online application process
  • Short-term loans with monthly payments (as opposed to daily or weekly as with many competitors)
  • No credit score minimum
Cons:
  • Charges late fees
  • Hard credit pull after loan offer is accepted
  • Requires personal guarantee
  • Higher interest rates

Kabbage Business Loans

Kabbage Business Line of Credit

**Please note that in 2020 Kabbage placed their line of credit lending on hold until further notice.**

  • Maximum loan amount

    $2,000 to $250,000

  • Loan term

    6, 12, or 18 months

  • Interest rate

    1.25% to 10% per month

Qualifications for Kabbage Line of Credit:

  • Annual revenue

    $50,000 (or $4,200 per month for the last three months)

  • Credit score

    No minimum personal credit score

  • Time in business

    One year in business

Kabbage Funding does not work with the following businesses/industries:

  • Nonprofits
  • Ones with large outstanding balances with other lenders
  • Ones located outside the 50 U.S. states and territories
  • Marijuana/CBD
  • Firearms
  • Gambling
  • Financial institutions
  • Lending

How to Get a Loan With Kabbage

If you meet the minimum Kabbage Funding loan requirements, you can dive into filling out their online application.

Application and Underwriting Process

You’ll create a Kabbage account by offering your email and adding a password, and they’ll then ask for basic business and personal information including your name, business name, business type, home and business addresses, phone number, industry, EIN, and social security number, and at least three months of accounting records.

Once you’ve given this information, you’ll be prompted to connect the financial platforms you use to your Kabbage Funding business loan application. You’ll need to connect your business checking account, plus any other online services your business uses and they will ask that you provide the login information for each account you connect. Examples of online services you can connect to are: 

  • PayPal, 
  • Amazon, 
  • eBay, 
  • Xero, 
  • Stripe, or 
  • QuickBooks. 

It’s important to sync up as many business services as possible because the more business revenue you can demonstrate, the more likely you are to qualify for a credit line. They review and underwrite your loan based on the information they receive from your synced accounts. Therefore, the more accounts you can link to your application that show your revenue and business performance, the more data they have to underwrite your line of credit.

Once you’ve connected your accounts, their online algorithm performs the underwriting, so you can get an approval decision in minutes. If you’re approved, you’ll instantly see the size of your credit line, the repayment terms offered, and the interest rate. Some customers will be given the option to choose between a six-, 12-, or 18-month repayment term.

After you sign your loan agreement, your funds will be sent to the account that you indicate, either your business checking account or a PayPal account. Funds deposited into a PayPal account will take only a few minutes to process, whereas it may take up to three days to receive the funds in your business checking account. Once you’ve received your funds, you can immediately start drawing money from your credit line and you’ll only pay for funds that you use.

You’ll want to keep in mind that the application process can take longer for credit lines above $200,000 and in cases where Kabbage Funding has trouble verifying your business information. If they do not approve your application for funding the first time around, their algorithm will keep tabs on your business using the accounts you linked. If and when you meet their business line of credit requirements, they will alert you. Along these lines, your account will also be regularly reevaluated to see if you’re eligible for changes in your credit line or fees.

Post-Funding Process

Once funded, you can pull from your Kabbage Funding revolving line of credit as often as once per day—and you can do so using the Kabbage mobile app or online dashboard. As with most lines of credit products, you’ll only pay interest on what you pull from the pool of funds.

Repayment Process

Kabbage will inform you of your full repayment schedule during the underwriting process—this way you can be fully prepared to start making the payments. They’ll automatically collect the minimum repayment each month from your business bank account. You’ll also be able to make manual payments at any time. Additionally, you’ll be able to review your payment plan and schedule on the online dashboard. They do not report to personal credit bureaus or business credit bureaus, so your activity won’t affect your credit scores. 

Every month, you’ll pay back an equal portion of the loan principal plus a fee. Monthly fees range from 1.25% to 10% of the total amount you borrowed. With the six- and 12-month Kabbage Funding lines of credit, you’ll pay a fee every month you have a balance, whereas, with the 18-month line of credit, you’ll have a fee each month throughout the term, regardless of whether or not you have a balance. 

Additionally, the interest is front-loaded on the six-month loan and 12-month loan, which means you pay a higher fee during the first two months of a six-month loan and during the first six months of a 12-month loan. The fee on the 18-month loan is the same every month throughout the term of the loan.

Kabbage doesn’t charge prepayment penalties, so with the six- or 12-month loans, you can actually save on monthly fees if you are able to repay the borrowed funds early. Once again, you can manage your upcoming payments, see historical payments, and preview potential payments for any new loans you make using your dashboard.

Advantages and Disadvantages of Kabbage Funding

Advantages Disadvantages
  • Good option for quick business loans to finance small projects or manage cash flow
  • Can fund line of credit application almost instantly
  • One of the only short-term funding options with monthly payments
  • Does not charge extraneous fees and rolls all costs into one monthly fee
  • Simple, automated online application
  • Can connect application to other online accounts like Amazon, eBay, or Stripe
  • No minimum credit score, so Kabbage is good for business lines of credit for those with bad credit
  • Annual percentage rate (APR) can be as high as 100% if you’re approved for a line of credit with a monthly fee at the higher end of the spectrum
  • Doesn’t report to personal or business credit bureaus so working with Kabbage won’t help build your credit
  • Even though you can pay early, you won’t save much money doing so since the fees are front-loaded

Kabbage Customer Reviews

If you check Kabbage reviews from their current and previous customers, you’ll find that they’re generally pretty good. The company has an A+ rating on the Better Business Bureau (BBB), so you can read more detailed reviews on that site.

That being said, common complaints in their reviews state that their interest rates are too high. Although they certainly charge an expensive rate to borrowers with poor credit, this is the cost of working with a lender that approves less-qualified borrowers and does so very quickly. Plus, they’ll be very transparent with your rates from the get-go.

Other Kabbage business loan complaints include issues related to billing and collection, logistical problems with the product, and problems with their customer service. 

However, the reviews aren’t all bad. Users liked how easy the application process was and how quickly they got their funding. The terms of the loans and repayments are easy to understand and if there was ever an issue, customer service was quick to come to a resolution. 

Those who switched from traditional banks were pleasantly surprised by how easy acquiring funds could actually be, and highly recommend Kabbage over traditional banks for multiple reasons, one of them being transparency of information like fees and interest rates.

Top Alternatives to Kabbage

Kabbage Small Business Loans

Fundera's Score

5
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OnDeck

Fundbox

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Fundera Score

5

Fundera Score

4

Fundera Score

5

Fundera Score

4

Products Offered

Term loan; line of credit

Products Offered

Invoice financing; lines of credit

Products Offered

Invoice factoring; lines of credit

Products Offered

Lines of credit

Interest rates

Starting at 35.1%; 31%

Interest rates

Starting at 4.66% per week

Interest rates

Starting at 0.25% per week; Starting at 4.8%

Interest rates

40% to 80% APR

Minimum credit score required

600

Minimum credit score required

500

Minimum credit score required

530; 650

Minimum credit score required

560
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Frequently Asked Questions

Is Kabbage in Fundera’s Network?

Kabbage is in Fundera’s Lender Network. The Fundera team has carefully vetted Kabbage and determined that their offering is one of the best in their product category. When working with Kabbage, you can be sure you’re getting transparent, fair pricing on a best-in-class product.

Senior Contributing Writer at Fundera

Priyanka Prakash, JD

Priyanka Prakash is a senior contributing writer at Fundera.

Priyanka specializes in small business finance, credit, law, and insurance, helping businesses owners navigate complicated concepts and decisions. Since earning her law degree from the University of Washington, Priyanka has spent half a decade writing on small business financial and legal concerns. Prior to joining Fundera, Priyanka was managing editor at a small business resource site and in-house counsel at a Y Combinator tech startup.

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