One thing we like about Kabbage are the straightforward eligibility requirements: one year in business with $50,000 in annual revenue to qualify for a line of credit up to $100,000. Because Kabbage doesn’t require a minimum credit score, it’s a good option for business owners who may have had issues qualifying elsewhere due to their personal credit. Instead of solely relying your personal credit score, Kabbage analyzes your business’s revenue and cash flow, so borrowers with high revenue businesses are more likely to get approved. Kabbage also offers quick funding -- either within the same business day if using PayPal or one to three business days if using a bank account.
- Review: Who Should Apply?
- Eligibility Criteria
- Small Business Loan Features
- Application Process
- How Does Kabbage Compare to Other Online Lenders?
Kabbage Review: Who Should Apply?
Kabbage can be a great choice for a line of credit for business owners who have had trouble qualifying elsewhere. While APRs start higher than at other lenders, Kabbage has no minimum credit score requirements to apply, so it can be a good source of funding for small business owners with poor to fair credit.
|Good for...||Bad for...|
The Pros of Using Kabbage
One thing that we like about Kabbage is that the lender cares more about a business’s financial stability than its owner’s credit score. There is no minimum credit score needed to apply for a Kabbage line of credit. Instead, you’ll need to be in business at least one year and post annual revenue of $50,000 to qualify for a line of credit up to $100,000. If you want to qualify for more, your business will need to be at least three years old with $500,000 in annual revenue. Kabbage will also evaluate your business’s online accounts, including online banking accounts, vendor accounts and social media accounts, to determine your line of credit terms. Services and accounts that you can connect to Kabbage include eBay, Amazon, PayPal, QuickBooks, Etsy, Xero, Chase, Wells Fargo and more. The more accounts you link to your Kabbage account (and the more revenue you can demonstrate), the more you may be able to borrow.
In some cases, businesses can receive funds as fast as the same day, making Kabbage a good choice for getting funds quickly and conveniently. You can either choose to receive funds via PayPal, in which case funds will be available as fast as the same day, or through a business bank account, in which case it can take up to three days to receive money. If you are already use PayPal, Kabbage does offer another big advantage: PayPal users also regain available funds quickly if they make payments with direct PayPal transfers.
The Cons of Using Kabbage
One downside to Kabbage is the higher APRs. Because Kabbage does not require a minimum credit score to apply and offers convenient, quick access to funds, APRs are between 20% and 80%. This is high even compared to other online lenders (most have rates starting between 8% and 10%), and it’s certainly higher than what you might find through a bank or SBA loan.
Kabbage’s fee structure is also a little confusing to understand, and paying early won’t save you a ton in interest. Rather than using interest rates, Kabbage uses a monthly fee rate. This fee ranges from 1.5% to 10.0% of the line amount. Ideally, you could save on fees by paying early, but since Kabbage charges higher fees initially, you will not save quite as much. For example, if you borrow $10,000 for six months with a fee of 10%, each monthly payment will include principal for one-sixth of the total ($1,666.67) plus loan fees of $1,000 the first two months and about $200 the remaining months. If you repay one month early, you will only save $200 in fees.
Because Kabbage only offers short-term lines of credit, it’s not suitable for all business needs. Kabbage is not a good option if you need to borrow more than $150,000, you want terms longer than one year or you want a term loan. The lender only offers a line of credit product with amounts up to $150,000 and terms of six or 12 months.
Kabbage offers convenience and flexibility to borrowers who need quick access to cash or have had issues getting approved at other lenders. While Kabbage loans are expensive, they can be a reasonable option for borrowers with poor to fair credit. And because Kabbage can instantly deposit funds to PayPal account, it can be a good product for businesses that need a financial safety net to cover emergency expenses. However, if you can afford to shop around, you should evaluate other lenders to see if you can qualify for a lower rate. Kabbage is also not suitable for businesses that want a term loan or more than $150,000 in funding.
To be eligible to apply for a small business line of credit from Kabbage, you must meet the following criteria:
|Age of business|
|Personal credit score||None|
Kabbage will also consider your business’s banking, bookkeeping, social media and vendor accounts to approve or reject your business (and to help you qualify for a higher line amount).
Kabbage Small Business Loan Features
Kabbage only offers lines of credit to small businesses. You can borrow up to $150,000 for either six- or 12-month terms.
|Line Amount Range||$2,000 - $150,000|
|APR Range||20% - 80%|
|Line of Credit Terms||6 - 12 months|
Kabbage Application Process
The application process at Kabbage is entirely online and typically takes less than 10 minutes to complete. You’ll need to enter some basic information about your business, including the legal name, address, industry type and your business’s federal tax ID or employee identification number. After entering this, you’ll proceed to the “Instant Business Review”, which will ask you to connect your online accounts to your Kabbage account. This includes banking, bookkeeping, vendor and payment processing accounts.
After completing this step, you will need to enter your personal information, including your name, home address and your Social Security number. You’ll also need to consent to a hard pull on your credit report. After assessing the health of your business through an automated online process, Kabbage will approve or reject your application. If approved, you can link your social media accounts, which could help you get an increase to your line of credit. If rejected, your Kabbage account will continuously monitor your business information, so you may be approved in the future without having to reapply.
How Does Kabbage Compare to Other Online Lenders?
While Kabbage has relatively lenient qualifications, you may want alternative options. Let’s evaluate some of its competitors.
Kabbage vs. OnDeck
OnDeck is a better option than Kabbage if you think you can qualify for an APR under 20%. OnDeck offers lines of credit and small business term loans up to $100,000 and $500,000, respectively. To be eligible, you’ll need to be in business one year with $100,000 in annual revenue. You'll also need a personal credit score of at least 500. OnDeck does require daily or weekly repayment, which -- depending on your business -- could be a good or bad thing. If you must have a monthly repayment schedule, Kabbage is the better choice. One thing we do like about OnDeck is that the lender reduces fees on each subsequent loan you take out, and you may be even able to qualify for a lower interest rate too.
- APR: 9.3% - 99.7%
- Terms: 3 - 36 months
- Amount: $5,000 - $500,000
- Repayment: Daily or weekly
Kabbage vs. Fundbox
If you can’t meet the eligibility criteria at Kabbage, Fundbox is another good choice for working capital financing. Qualifying at Fundbox is based on your time in business (three to six months, depending on the product you choose), some revenue ($25,000 for a line of credit), no bankruptcies in the past two years and your use of accounting software and your business bank account. There are no credit score requirements to qualify for invoice financing or a line of credit, and despite the less strict eligibility criteria, Fundbox offers lower APRs than Kabbage at 13% to 60%. Accounting services that Fundbox works with include QuickBooks, FreshBooks, Xero, Harvest, Clio and Zoho. Fundbox offers both a invoice financing and line of credit product, and either one can help you with cash flow gaps or working capital needs. Like Kabbage, Fundbox also offers quick funding -- in as fast as one business day, in some cases.
Highlights (invoice financing)
- APR: 13% - 60%
- Terms: 3 - 6 months
- Amount: $100 - $100,000
- Repayment: Weekly
Kabbage vs. Funding Circle
Funding Circle offers lower rates and larger loan amounts than Kabbage. However, it only offers term loans, so if you’re looking for a line of credit, you’re better off looking at Kabbage. You can borrow up to $500,000 through Funding Circle with rates between 8% and 33% and maturities of one to five years. Qualifying for a Funding Circle business loan is a little more difficult: you’ll need to be in business two years with $150,000 in annual revenue. Your business must be incorporated or an LLC, and show profitability for the past two years. You’ll also need to have a personal credit score of 620 and be able to personally guarantee the loan. Because Funding Circle is a marketplace lender, it can take up to 10 days to fund your loan offer.
- APR: 7.35% - 33%
- Terms: 6 - 60 months
- Amount: $25,000 - $500,000
- Repayment: Monthly
Kabbage vs. PayPal Working Capital
PayPal Working Capital is only suitable for businesses that make a majority of their sales through a business PayPal account, so if you don’t use PayPal, Kabbage is the winner here. While Kabbage does offer some advantages for PayPal users, you’ll likely get a lower rate by getting a loan from PayPal directly. You can borrow up to 18% of your past year PayPal sales, up to a maximum of $97,000. Rates range from 15% to 30% with terms up to 18 months. To qualify for a PayPal working capital loan, you’ll need a PayPal business or premier account for the past three months with $15,000 or $20,000 in gross annual revenue, respectively. PayPal does require daily repayment, but only on the days when you make sales.
- APR: 15% - 30%
- Terms: 0 - 18 months
- Amount: $1,000 - $97,000
- Repayment: Daily