Kabbage

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Reviewed by Priyanka Prakash, JD

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Editor Review
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Editor's note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone.

What Is Kabbage?

Kabbage is an online lender who offers short-term lines of credit to small businesses. Borrowers can receive credit lines of up to $250,000 with repayment terms of six, 12, or 18 months. 

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Kabbage Offers

Line of Credit Product

Here are fast facts about Kabbage's Line of Credit product:

dollars
Maximum loan amount
$2,000 – $250,000
term-calendar
Loan term
6, 12, or 18 months
rate-document
Interest rate
1.5% - 10% per month

Minimum requirements to qualify for Kabbage's Line of Credit product:

Calendar and Money
Annual revenue
$50,000

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

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Personal credit score
No minimum
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Time in business
1 year

Kabbage does not work with businesses:

  • That are non-profits.
  • That have large outstanding balances with other lenders.
  • That are in the following industries:
    • Marijuana/CBD
    • Firearms
    • Gambling
    • Financial institutions
    • Lending

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.

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What You Need To Apply

  • A business checking account
  • If you use accounting software, at least three months of records

Other Important Factors

  • Kabbage will only fund businesses with a minimum average bank balance of $2,500.
  • Kabbage will be able to work with business owners who have declared personal bankruptcy one time, but at least one year must have passed since discharge.
  • Kabbage will only approve borrowers who have at least 25% ownership of the business in question.
  • Kabbage does not look at your business credit score.
  • Kabbage will not consider borrowers who have more than three non-sufficient fund transactions in the last 30 days.

You Need To Know That

  • Kabbage collects repayment by automatic monthly payments.
  • Kabbage front loads a borrower’s interest costs to their first two months for six-month repayment terms and to their first six months for 12-month repayment terms. Fees remain the same each month for their 18-month product.
  • Kabbage can fund loans as quickly as the same day you apply, but it can take up to three business days, depending on where you access the funds (e.g., checking account or PayPal account).
  • Kabbage will do a hard credit pull from Experian with the borrower’s consent after a loan offer is accepted.
  • Kabbage will require a personal guarantee from the business owner.

Editor Review

The Underwriting Process With Kabbage

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

Once you’ve given this information, you’ll be prompted to connect the financial platforms you use to your Kabbage business loan application. That includes your business checking account, plus any other online services your business uses, such as PayPal, Amazon, eBay, and QuickBooks. Kabbage will ask that you provide the login information for each account you connect.

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. Kabbage reviews and underwrites your loan based on the information they get from your synced accounts. The more accounts you can link to your Kabbage application, the more business data Kabbage has to underwrite your line of credit.

Kabbage’s online algorithm does all the underwriting, so getting an approval decision takes just minutes. If you’re approved, you’ll instantly see the size of your credit line, the repayment terms offered, and interest rate. Some customers will be given the option to choose between a six, 12, or 18 month repayment term.

You can immediately start drawing money from your credit line once you’re approved, and you’ll only pay for funds that you use. You can also request a Kabbage Card through your online account. The card works like a debit card, allowing you to draw funds from your credit line wherever Visa is accepted.

Keep in mind that the application process can take longer for  credit lines above $200,000 and in cases where Kabbage has trouble verifying your business information. If Kabbage doesn’t approve your application for funding the first time around, their algorithm will keep tabs on your business. If and when you meet their qualification requirements, they will alert you.

Kabbage Post-Funding

Once funded, you can pull from your Kabbage line of credit as often as once per day. As with most line of credit products, you’ll only pay interest on what you pull from the pool of funds.

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 repayment each month from your business bank account. You’ll be able to review your payment plan and schedule on Kabbage’s online dashboard. Kabbage does not report to the personal credit bureaus or the business credit bureaus, so your activity won’t affect your credit scores.

Every month, you’ll back an equal portion of the loan principal plus a fee. Monthly fees range from 1.5% to 10% of the total amount you borrowed. 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 you can actually save on monthly fees if you are able to repay the borrowed funds early. However, Kabbage charges most of the  fees in the first few months, so repaying early won’t save you all that much in the end. Plus, the 18-month line of credit works differently. That credit line comes with the same fee for all 18 months, even if you repay early. 

After you repay the funds you’ve drawn from your Kabbage line of credit, those funds will become available to you again because this product is a revolving line of credit.

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Advantages of Kabbage

Kabbage is a good option if you’re looking for quick business loans to finance small projects or manage your cash flow. They can fund your application for a line of credit pretty much instantly, which means you’ll have access to working capital as soon as the same day you apply.

Kabbage loans are one of the only short-term funding options that come with monthly payments. Meanwhile, Kabbage competitors will require you to pay down your debt on a weekly or even daily basis. This is a huge perk of Kabbage funding since monthly payments can be better planned for.

Kabbage also offers funding to many small business owners who don’t qualify for other business loans. They don’t have a credit score minimum. Kabbage will check your personal credit score during underwriting, but business revenues factor much more heavily into approval. 

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Disadvantages of Kabbage

Kabbage reviews your application quickly to give you fast and easy access to capital, but they’ll charge you for their speed. When you convert their monthly fees to an annual percentage rate (APR), you might receive sticker shock. If you’re approved for a line of credit with a monthly fee on the higher end of the spectrum, your APR can skyrocket up to 100%.

On top of steep interest rates, Kabbage doesn’t report to the personal or business credit bureaus. If your credit is struggling, you’ll want to work with a lender who reports good borrowing behavior on your business loan to the credit bureaus—it’s the only way to build your credit score and graduate to more affordable business funding. 

In general, you should always take the lowest-cost loan available to you. So, if you can qualify for a less expensive option, consider that over a Kabbage line of credit instead. To see if you can afford a Kabbage loan, check out our Kabbage business loan calculator and plug in the numbers on your line of credit offer.


Frequently Asked Questions

Who Are the Top Kabbage Competitors to Consider?

As you consider filling out a Kabbage application, you might be wondering whether there are top Kabbage competitors that should be on your radar. Companies exactly like Kabbage are few and far between, but there are many other short-term lenders.

If you want to learn more about Kabbage competitors, look into OnDeck for lower rates and Fundbox for easier-to-access financing.

What Are Kabbage Interest Rates?

Kabbage loans, like most short-term lenders, tend to have higher interest rates than what you can find at a traditional bank.

The average interest rate for a Kabbage loan is about a 40% APR. Although this is the average, a Kabbage line of credit could have an APR ranging from about 24% to 99%. These are relatively expensive business loan interest rates, so Kabbage should be a solution only for borrowers who can’t qualify for other types of business loans just yet.

How Does the Kabbage Fee Structure Work?

Kabbage offers three repayment terms to borrowers—six months, 12 months, or 18 months.

For the six-month Kabbage line of credit, you’ll pay:

  • 1.5% to 10% of the amount you borrowed for the first two months
  • 1.25% of the amount borrowed for the remaining four months

As for the 12-month Kabbage business loan, the concept is the same. You’ll pay:

  • 1.5% to 10% of the amount you borrowed for the first six months
  • 1.25% of the amount you borrowed for the remaining six months

The 18-month Kabbage business loan will carry a flat fee of 1.25% to 3.25% every month.

The percent of the original amount depends on your qualifications as a borrower—and what Kabbage line of credit you qualify for as a result.

Because you’re paying a good chunk of the fees in the first two to six months of the shorter-term Kabbage loans, you have little incentive to pay early. Kabbage doesn’t charge a prepayment penalty, but you won’t really save that much money if you pay early since the fees are front loaded.

What Are Common Kabbage Complaints From Customers?

If you check Kabbage reviews from their current and previous customers, you’ll find that they make a lot of business owners pretty happy.

However, common complaints in Kabbage reviews are that their interest rates are too high. While Kabbage certainly charges 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 Kabbage’s customer service. You can read detailed customer reviews on Kabbage’s Better Business Bureau (BBB) page. They are a BBB-accredited business and currently have an A-plus rating.

How Do I Choose Between Kabbage vs. OnDeck?

Wondering who to choose between Kabbage vs. OnDeck? OnDeck is another online lender who offers short-term lines of credit, but their line of credit product will only come with a six-month repayment term and will only range up to $100,000.

Plus, OnDeck requirements will be stricter than Kabbage requirements—you’re going to need a credit score of at least 600 and at least $100,000 in annual revenue to meet their minimum requirements. And if you decide not to draw from your OnDeck line of credit in a given month, then you’ll need to pay a $20 monthly fee.

That said, OnDeck beats out Kabbage when it comes to interest rates—their APRs typically range from 13.99% to 36%.

The better choice of lender for you will depend on a number of things, but how often you plan on drawing funds and the minimum requirements you’re able to meet are factors to consider.

How Do I Choose Between Fundbox vs. Kabbage?

Another top Kabbage competitor that you might have come across is Fundbox, so you might also be wondering how to decide between Fundbox vs. Kabbage.

A Fundbox line of credit is easier to secure and comes with lower rates, but they only offer funding up to $100,000. In addition, repayment terms are just three to six months with Fundbox. If you need larger funding amounts and longer repayment times, consider Kabbage.

Is Kabbage a Good Deal?

Some business owners quite simply want to know whether or not Kabbage is a good deal. Generally speaking, Kabbage loans will be more expensive than longer-term options. That said, Kabbage business loans will be much more accessible than longer-term Kabbage alternatives. Plus, because Kabbage loans offer monthly scheduled payments, they’ll be much easier to afford than other short-term funding options that come with more frequent payments. The less frequent payment options that Kabbage offers could help your business’s cash flow.

 

How Are Kabbage Requirements So Lax?

Kabbage requirements are some of the easiest to meet in the industry—but how are they able to pull off such lax base requirements?

Kabbage requirements—$50,000 of annual revenue and one year in business—are lax because Kabbage reviews your application based on your bank statements and on other business services that you link to your Kabbage account (e.g. Amazon, PayPal, Etsy, etc.). Kabbage’s underwriting algorithm does a great job of evaluating your ability to repay your loan based on your synced accounts.


Last updated October 2, 2019