What Is a Kabbage Loan?
Kabbage is a financial technology company that was ideated in 2008 when Rob Frohwein, the company’s founder and current CEO, noticed a gap in lending despite major technological advancements. Frohwein wondered why lenders weren’t taking advantage of the information available to simplify business lending — deciding that if no one else was, he would do it himself.
Three years later, Kabbage, named for the mid century slang term for money, came to life. As explained by its website, “Since its launch in 2011, Kabbage has grown to lend to all small businesses, online and offline, and has provided more than $3 million in the U.S. and internationally to ensure small business[es] have the support they need to grow.”
How Kabbage Loans Can Help Your Business
The unique selling point of Kabbage, which debuted with Kabbage 1.0 in 2011, is that it can seamlessly and immediately pull data to assess the health of your business and qualify applicants for loans right away due to an automated, online process. Consequently, applying for a loan takes less than seven minutes. Those are words you probably never thought you’d hear.
Before getting into the nuts and bolts of Kabbage’s lending services, it’s worth taking a look at all of the different ways Kabbage can help your business. Obviously, the immediate line of credit of up to $250,000 dominates the spotlight, but Kabbage also has a wealth of useful information regarding the process of applying for and using loans that small businesses can benefit from.
Kabbage’s website has an entire page dedicated to the best ways to take advantage of loan money, ranging from expanding products or services to launching a marketing or ad campaign to hiring more staff. You can read case studies or use the site’s Return on Investment calculator and Small Business Revenue Index to assess the potential benefits a Kabbage loan could bring to your company.
Kabbage also recognizes the unique position of female entrepreneurs and has a blog with posts guiding women in business, in addition to loans and small business resources designed specifically for women.
Though it can be done almost instantaneously through Kabbage, taking out a loan isn’t a quick process. There is a lot of planning involved, as well as payment plans that can last long periods of time after the fact. As a result, the Kabbage website is stocked with resources that can help guide you through each step.
Whether you have specific questions or just want to know more about loans in general, take advantage of these online resources or contact Kabbage support at firstname.lastname@example.org or 888-986-8263.
Outside of its signature lines of credit, Kabbage offers services like Kabbage Payments, which you can use to get paid faster through sending professional invoices or through a custom pay link to accept card payments online, and Kabbage Insights, a program that combines your business accounts into one place to help with understanding your cash flow.
The Lowdown on Kabbage Loans
To be eligible for a Kabbage loan, your business has to meet two minimum requirements:
- Your business must have been operating for at least one year
- Your business revenue is at least $50,000 per year or $4,200 per month
If you meet those basic requirements, you can start the process by filling in a short application online. The application requires you to connect your bank account for a quick review of your financial performance which will determine whether or not you qualify for your desired loan.
Instead of just looking at your credit score, Kabbage will review transactions and information from your business checking account to assess the financial health of your business, in addition to other details obtained through the applicants credit file. If you are qualified, you will be able to access the capital immediately on any device — and you will only ever pay for the capital you use.
While you can get a line of credit of up to $250,000 through Kabbage, not every business needs that much capital at one time. The minimum credit line you can request is $2,000.
Before you commit to anything, see whether the estimated monthly repayments for your loan size are doable for your business using the online loan calculator. You can select from 6-, 12-, and 18-month loan terms, paying back an equal portion of your loan plus a monthly fee.
It’s worth noting that there are no prepayment penalties with Kabbage, so you can pay off your loan early and save on monthly fees. If you want to talk more about your individual repayment schedule, the Kabbage customer service team can give advice and counseling.
This loan is right for qualified business-owners seeking capital they can put to use immediately. The speed with which you can acquire a Kabbage loan (if qualified) is one of its biggest draws and differentiates it from other options.
Another benefit of Kabbage is that it doesn’t rely heavily on personal credit, so you can still qualify for a loan with average credit. This is great to keep in mind for entrepreneurs who may have hit bumps in the past.
Due to the general lack of funding in woman-owned businesses, accessible loans like Kabbage are an important resource for female entrepreneurs to keep in mind. While Kabbage has a number of unique benefits, it is not the only lender. Women should consider other options like the SBA Microloan Program, and Accion Women-Owned Business Loans before deciding on which lender to work with for their businesses.
Once you have your loan, plan out the best way to spend the money, consulting business guides and experts along the way. Make sure you’ve done an honest assessment of your company’s finances, creating a careful budget, in addition to managing your cash flow.
Spending your loan effectively really depends on what you needed the loan for in the first place. Some good uses of the money include investing in inventory or equipment, or other large purchases that have a high up-front cost and large long-term payoffs. Marketing could also be worthy of the funds, as it is almost always beneficial to attract new customers. Hiring and training, new websites, and technology have also proven to have a high return on investment.