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 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.

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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)

Page 1
Personal credit score
No minimum
Monochrome clock icon
Time in business
1 year

Kabbage does not work with businesses:

  • That are nonprofits
  • That have large outstanding balances with other lenders
  • That are located outside the 50 U.S. states and territories
  • 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

  • Business name, type, and industry
  • Business tax ID
  • Social security number
  • A business checking account
  • If you use accounting software, at least three months of records

Other Important Factors

  • They will only fund businesses with a minimum average bank balance of $2,500.
  • They 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.
  • They will only approve borrowers who have at least 1% ownership of the business in question.
  • They do not look at your business credit score.

You Need To Know That

  • Kabbage collects repayment by automatically withdrawing your minimum payment each month. You can also make your own payment at any time.
  • Each month, you’ll pay back an equal portion of the loan principal plus the monthly fee. The lender charges a fee every month you have a balance for their six- or 12-month business lines of credit, whereas for the 18-month credit line, your monthly charge is accrued in full at the time of funding and an equal portion of this fee is paid each month for 18 months, regardless of your balance over those months.
  • Within this system, Kabbage front-loads a borrower’s interest 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.
  • They charge one monthly fee that incorporates interest, processing, and underwriting. There are no separate application fees, origination fees, annual fees, monthly maintenance fees, or documentation fees.
  • They does not charge a prepayment penalty.
  • They will charge a late fee for late payments that will vary based on your balance amount. There is a four-day grace period before this fee is applied.
  • They can fund loans as quickly as the same day you apply, but it can take up to three business days, depending on the accounts you connect and where you access the funds (e.g., checking account or PayPal account).
  • If you use this lender’s dashboard or mobile app, you can withdraw funds in any increment of $500 or more.
  • They 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. In certain instances, they may file a general lien on your business.

Editor Review

The Underwriting Process With Kabbage

If you meet the minimum Kabbage loan requirements, you can dive into filling out their 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 including your name, business name, home and business addresses, phone number, industry, EIN, and social security number.

Once you’ve given this information, you’ll be prompted to connect the financial platforms you use to your Kabbage business loan application. You’ll need to connect your business checking account, plus any other online services your business uses, such as PayPal, Amazon, eBay, Xero, Stripe, or QuickBooks. They 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. 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 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.

Kabbage Post-Funding

Once funded, you can pull from your Kabbage 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 line of credit products, you’ll only pay interest on what you pull from the pool of funds.

They 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 1.5% to 10% of the total amount you borrowed. With the six- and 12-month Kabbage loans, you’ll pay a fee every month you have a balance, whereas, with the 18-month loan, 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.

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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 can have access to working capital as soon as the same day you apply.

Additionally, their loans are one of the only short-term funding options that come with monthly payments. Many Kabbage competitors, on the other hand, will require you to pay down your debt on a weekly or even daily basis. This is a huge perk since monthly payments can be better planned for and will not have the same impact on your cash flow as weekly or daily payments. Plus, they do not charge extraneous fees, and instead, rolls all of your costs into one monthly fee, making it even easier for you to plan and understand your payments.

Moreover, Kabbage’s simple, automated online application is another notable benefit, especially for business owners who have a number of online accounts like Amazon, eBay, or Stripe, on top of their business bank account. Unlike other lenders that will require you to actually gather documentation for your application, they allow you to connect your accounts online, automatically pulls your information, and then evaluates your qualifications.

This being said, Kabbage is also a great option for a business line of credit for bad credit. They don’t have a credit score minimum, and because they base much of their evaluation process on your bank account and other business financials, there is more flexibility for business owners to qualify (even if they don’t qualify for other financing products), especially those with poor credit.

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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’ll find that their fees are actually pretty high. Plus, if you’re approved for a line of credit with a monthly fee on the higher end of the spectrum, your APR may be as high as 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. 

This being said, in general, you should always take the lowest-cost loan available to you. Therefore, if you can qualify for a less expensive option, you’ll want to consider that over a Kabbage line of credit. 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 you may look into.

For example, if you’re looking for lower rates in either a short-term line of credit or short-term loan, you might consider working with OnDeck. For their line of credit, OnDeck interest rates range from 11% to 63% APR.

On the other hand, if you need a line of credit with even more flexible requirements, you might look to Fundbox—which is a particularly great option for new businesses or startups. Fundbox only requires three months in business, a 500 personal credit score, and a minimum annual revenue of $25,000.

Finally, if you have a solid credit score (660+) but want a faster application process than a bank can offer, you might consider Fundation—who offers long-term and affordable business lines of credit and term loans.

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, their line of credit could have an APR ranging from about 24% to 99%. These are relatively expensive business loan interest rates, so they should be a solution only for borrowers who need financing but can’t qualify for other types of business loans.

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 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

For the 12-month 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 that you’ll pay will depend on your qualifications as a borrower—and which one of their lines of credit you qualify for as a result.

With this payment system, because you’re paying a large part of the fees in the first two to six months of the shorter-term Kabbage loans, you have little incentive to pay early. They do not charge a prepayment penalty, but since the fees are front-loaded, you won’t really save that much money by paying early.

What are common Kabbage complaints from customers?

If you check Kabbage reviews from their current and previous customers, you’ll find that they’re generally pretty good.

This being said, however, 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. You can read detailed customer reviews on their Better Business Bureau page. They are a BBB-accredited business and currently have an A-plus rating.

How do I choose between Kabbage vs. OnDeck?

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

Plus, OnDeck requirements will be stricter than Kabbage requirements—you’ll need a credit score of at least 600 and at least $100,000 in annual revenue to meet their minimum requirements. Additionally, 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. OnDeck will also require weekly payments for their line of credit product and will charge an origination fee.

This being said, however, OnDeck beats out Kabbage when it comes to interest rates—their APRs typically range from 11% to 63%. Additionally, OnDeck offers a short-term loan product for you to consider as well.

Ultimately, the best lender for your business will depend on a number of factors, most of which will be specific to your business. Nevertheless, it’s worth considering how often you plan on drawing funds, the interest rates, and the minimum requirements you’re able to meet when comparing these two lenders.

How do I choose between Fundbox vs. Kabbage?

Another top competitor that you might have come across is Fundbox, so you may be wondering how to decide between these two lenders.

In essence, when it comes to Fundbox vs. Kabbage, Fundbox’s line of credit is easier to qualify for—you only need three months in business, a 500 credit score, and annual revenue of $25,000—and Fundbox offers lower rates. This being said, however, Fundbox only offers funding up to $100,000, compared to $250,000 with Kabbage. Additionally, repayment terms are 12 to 24 weeks with Fundbox.

Therefore, if you need larger funding amounts and longer repayment terms, Kabbage will likely be the better option for you.

Are Kabbage loans good?

Some business owners quite simply want to know whether or not Kabbage loans are good.

Generally speaking, their loans will be more expensive than longer-term options. This being said, however, Kabbage business loans will also be much more accessible than longer-term alternatives. Plus, because Kabbage loans offer monthly scheduled payments, they’ll be much easier to afford than other short-term financing options that come with more frequent payments.

Therefore, their loans can definitely be considered a good option for flexible financing, especially for business owners with bad credit or who can’t qualify for more affordable, longer-term options. On the other hand, depending on your business needs and qualifications, you may find a lender that’s a better fit for you than Kabbage.

How are Kabbage requirements so flexible?

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

Kabbage requirements—$50,000 in annual revenue and one year in business—are so easy to meet because they review your application based on your bank statements and on other business services that you link to your account (e.g. Amazon, PayPal, Etsy, etc.).

Instead of evaluating your application based on typical business loan requirements, their underwriting algorithm reviews your ability to repay your loan based on your synced accounts—and your business’s financials, revenue, and overall performance demonstrated in those accounts.


Last updated January 14, 2020