Kabbage is financing provider that offers a short term line of credit product to small businesses. You can qualify for up to $150K of financing with Kabbage, but you must have been in business for a minimum of 1 year, with $50K+ in annual business revenue, and a personal credit score of at least 550. Kabbage can approve you through an online application within a matter of a few minutes, and fully fund you within 1-3 days.
Kabbage Terms, Qualifications, & Costs
Kabbage is a great short term financing solution, but can get expensive if you’re wanting financing for a year or more. Kabbage customers typically use their loans to fill short term cash flow gaps, or to fund working capital purchases. The table below shows the typical terms, qualifications, and costs, that Kabbage’s customers are likely to see with their line of credit product.
Kabbage Loans at a Glance
|Loan Amounts||$2K - $150K|
|Estimated APR||30% - 50%|
|Loan Term||6 or 12 Months|
|Funding Speed||1-3 Days|
|Time in Business||1+ Year|
|Annual Business Revenue||$50K+|
Who is a Kabbage Loan Right For?
Typically, Kabbage loans are given to small businesses looking to fill a working capital need for a very short term (6 months or less). If you’re a seasonal business looking to ramp up inventory, or in need of purchasing a piece of equipment before you get the money in, then Kabbage could be a good fit.
Since Kabbage offers a line of credit, many businesses use Kabbage as a security blanket against unexpected expenses. You never know when equipment is going to break, or when you need extra inventory because of an unforeseeable sales rush. With Kabbage, you only have to pay for the part of your credit line you’re using, so you can keep it without being charged for when you actually need the money.
Kabbage Reviews: Costs
A Kabbage loan can be costly, with an average APR of 40%. You would think that this would frustrate customers, but the costs actually sound higher than they are. If you only have a short term capital need then it’s much cheaper to use a Kabbage loan and pay it back within 6 months, than it would be for you to get a bank loan that you pay interest on for 5 years. The total cost of capital is less for the short term loan borrower, as long as you can make the payments.
Kabbage does not charge an interest rate, but instead charges a percent of your loan as a fee. They charge between 1.5% – 10% of your outstanding amount every month in a single payment (some of their competitors make you repay the loan weekly).
Kabbage Reviews: Customer Satisfaction
Customers love Kabbage, even with their high APR. They have a very high approval rating pretty much anywhere you look online. Their customer service is top notch, and they’re very quick to help their customers that have any problems. They are given an A+ rating by the better business bureau (BBB). Here is how their customers have rated them around the web:
Kabbage Customer Reviews Summary
|Reviewer||Rating||Number of Reviews|
|Merchant Maverick||3.5/5||Editorial Review|
Negative Kabbage Reviews
The majority of their negative reviews seem to be circled around their pricing, which they’re very transparent about. The things that they can control about the user experience seems to be very highly rated by their customers. Most of the negative reviews we’ve seen carry very little weight with us in determining the value of the company.
Kabbage has many competitors from traditional banks to specific financing lenders. Their main competitors are online lenders looking to loan money to small businesses. Some of these competitors include:
- OnDeck Capital:
OnDeck is often compared to Kabbage as they offer very similar loan products. OnDeck offers both a loan and line of credit product with varying APRs that typically fall in the same 30% – 50% that Kabbage does. They also can fund your business in 1-3 days.
- Lending Club:
Lending Club is a peer to peer financing company that allows individuals to invest into the products they loan out. They offer both personal loans and small business loans. Their small business loans have become their primary focus over the last few years. Their loans are slightly cheaper than Kabbage loans, but take an average of 7 days to fund.
Prosper is primarily a personal loan company, but their loans can be used for small businesses. Their process is easy, and their fees are straightforward. They can get you funded for up to $35,000 quickly, and the entire process is managed online.
BlueVine offers a line of credit product and an invoice factoring product for businesses with outstanding invoices. With invoice factoring, you don’t have to make any payments until your customer pays off the invoice. Their line of credit product is only available in 43 states, but their pricing and time to funding are competitive with Kabbage. You can borrow up to $100K with a BlueVine LOC.
The Smart Hack
Kabbage is a company that is highly respected in both the industry and by their former customers. That’s a positive thing, and becoming more rare, in the financing industry. While their APR is high, the short term nature of their loan product offsets that. If you’re looking for up to $150K in financing within the next 1-3 days then Kabbage could be the right option for you.