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Are Kabbage small business loans right for your business? Read this in-depth review and you will know.
You can apply online in about 3 minutes here.
Every company needs money, working capital, to stay open. To have merchandise to sell you need to buy materials to build inventory. Payrolls costs need to be paid even during seasonal sales fluctuations. Small firms rely on loans to fund these activities. Kabbage is one choice of alternative small business financing that is a good option for some companies.
Our Kabbage reviewers loved the super easy application process which is a plus for busy entrepreneurs. In comparison, other many banks require completion of long loan documents. You will know if you are approved within 48 hours. Then you will receive the loan proceeds very quickly often within just a few short days. This is crucial for enterprises that are working to capture opportunities with strict deadlines.
Kabbage, unlike banks and other lenders, doesn’t only use your personal credit score to evaluate your loan worthiness, instead, they study your accounting and banking data online. Lots of entrepreneurs have less than stellar credit history. Kabbage knew that fact and crafted their small business loans to work around the owner’s credit scores. Because Kabbage is lending money to more risky ventures, their fees are higher than some other financing alternatives.
Small businesses can borrow up to $250,000 to pay for payroll expenses, inventory, merchandise, marketing, and advertising.
WARNING – DO Not try to compare Kabbage business loans to personal, and other business type loans which you are more familiar with such as traditional bank installment loans such as home mortgages and car loans using the APR – average percentage rate.
Yes, certainly when shopping for a car loan you SHOULD compare the APR since the types of loan, and its repayment structure is similar to each other. However, that is NOT the case with these Kabbage short-term business loans. They are structured very differently and should be evaluated with different metrics.
If you try to use this method of loan shopping by APR it is like comparing apples or oranges, while both tasty fruits they are vastly different!
Personal loans for tangible items, such as cars and houses, are secured collateral backed loans. After making your payments for the specific term you own the asset outright. Contrast that with a working capital business loan that after using the cash and paying it back you own a larger and more valuable company.
Change the way you evaluate the cost and value of these type of loans to your business by using these correct measures instead of the old-fashioned, and inappropriate in this instance, standard APR (Annual Percentage Rate).
>>INSTEAD Decide how much is the money WORTH to your firm to grow, recover and survive today.
The greatest value of working capital for small business is the fuel it provides to help your small business grow bigger. The loan proceeds can purchase more inventory for greater sales volume, hire more employees to perform more services which generate more cash and profit in your firm. With working capital, you can fulfill larger orders. This formula is called ROI – return on investment, which means how much money can you make with the money you borrow.
One of the greatest reasons for small business failure is lack of capital to meet emergencies. Life is uncertain – especially that of a small business owner. It is not – IF disaster strikes, it is WHEN! Having a line of credit in place, available for the unthinkable, allows you to recover from disasters such as cyber attacks, new competition, loss of major clients and more and stay in business.
Every small business experiences shifts in sales patterns, seasonally or with market fluctuations. During those times of reduced cash flow, your fixed expenses such as rent and payroll still need to be paid – in full and on time. Working capital financing covers this shortfall to keep your business operating until the seasons heats up and your sales increase.
#1 benefit to small businesses is the speed of application to receipt of monies. This entire process from applying for the loan online to getting cash in your Paypal account can be accomplished in under one week. Compare that to traditional lenders schedule of over 30 days+.
Lots of owners love not having to fill out endless forms and reams of paperwork to apply for a loan or line of credit. Kabbage, being a leader in the digital revolution, uses the data from your online accounts such as Quickbooks, Xero Paypal eBay, Etsy, and Amazon, to evaluate your creditworthiness.
Bad credit is not an impediment to getting this business loan. Many an entrepreneur is held back from getting funding for their ventures due to past credit mistakes. Yesterday’s tough times stop people from moving forward into their own marketing. Fortunately, this is not as much of an issue at Kabbage. They will check your credit score but not use it exclusively to approve your loan. The data from your online activity is considered more heavily and weighted to your advantage. The loan fees are based on the data you supply.
Complex fee structures are hard to understand. Your fees will be based on Kabbage’s assessment of your ability to repay. It is structured similarly to mortgages, where you pay the interest first and principal later. Each monthly payment is comprised of both a percentage of the loan amount and your interest fee. In this example of a six-month loan, you pay a fee of between 1%-10% of the total loan for the first 60 days. Thereafter the fee amount reduces to 1%. Read your loan agreement for full details on these fees.
Rates are higher than traditional lenders due to the lenient credit requirements. You pay Kabbage extra money for their trust in your less than stellar credit rating. They take greater risk by lending to such individuals and need to charge more to cover loan defaults.
Qualifying for Kabbage is straightforward. As with all types of business loans, it is wise to review the bank’s requirements listed below before applying. Applying is free. You know that you do not need to accept the loan or credit line upon approval. Kabbage is more lenient than most lenders and you may find that you do indeed fit the requirements.
$50,000 in sale revenue annually, or at least $4,200 for the last 3 months.
Business checking account or online payment system such as Paypal. For loan proceeds and to make automatic payments.
The best way to evaluate any business loan source is to read the experience of actual customers. Our Kabbage reviews have analyzed hundreds of verified customers ratings and compiled this comparison chart below. What are customers ratings and reviews of actual business owners who got loans from Kabbage.com? Would they recommend getting loans or lines of credits from Kabbage.com?
We analyzed thousands of customer reviews and star ratings, on multiple trusted review sites, to compile this overview chart of customer experiences and reviews of Kabbage loans: Read the Kabbage reviews and find out if they are the right funding source for your company.
When considering getting a business loan it is wise to review all your options. Here we review the top alternative financing options as compared to Kabbage, Ondeck and Paypal loan reviews.
Kabbage makes getting business loans easier. Use the Kabbage loan calculator to estimate your monthly payment on your loan or credit line. It will calculate the fees and your loan amount payment schedule. Super easy and fun to use. Just slide the bar for the loan amount you want to apply to the lender and it will instantly display the fees and also early payment savings. The right column details your payments by month until the loan is repaid in full. Your total fees are clearly shown – nothing hidden in the fine print. I really like that transparency in a lender.
Kabbage is BBB Accredited since 1/21/2014. Below is the link to the Better Business Bureau complete report for Kabbage, Inc. I have personally read all reviews and complaints and my conclusion is a small percentage of customers have had administrative issues. The reviewers and complainants write about lost paperwork, delayed approvals, and customer service misunderstandings. Honestly, this could be said of any large financial institution who deals with millions of loans. The vast majority of customers are positive and 5 stars for Kabbage reviews.
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