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Kabbage
9.5
ratings

Overview

In 2008, Rob Frohwein noticed that despite the various technological advancements available, the lending industry wasn’t exploiting its benefits. This simple observation led to the birth of Kabbage. With a team of 3, Frohwein began streamlining the loan application process for small businesses by using online data. After three years of research and planning, this e-lending platform was launched in 2011. Kabbage was created using an automated online system that aided small business owners to qualify for loans quickly.

Since its establishment, Kabbage has underwritten over $3 billion to hundreds of entrepreneurs to build and expand their business. Continue reading to know more about this leading loan provider.

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Pros

  • Easy application and access
  • Enough borrowing for your need
  • Instant decision

Cons

  • Business loans only
  • Fees are 1.5% – 10% of the loan amount
  • Business revenue has to top $50,000 annually

Customer feedback and overall reputation

Currently, Kabbage is said to have one of the best customer services in the lending sector providing small business loans. Their customer service representatives are quite responsive and accommodate potential clients with a variety of inquiries. At the same time, they do not pressure the prospective borrowers with sales pitches which help borrowers make an informed and right decision.

Kabbage has earned an A+ from the BBB (Better Bureau Business). This rating is based on the customer reviews on BBB’s online platform. Apart from BBB, Kabbage has some excellent customer feedback across various consumer forums.

Collateral required

Kabbage offers unsecured small business loans, implying that the borrower doesn’t have to put up any of their assets as a collateral to secure credit. Not having to deal with the inconvenience of collateral is a huge benefit for small businesses looking for instant financial assistance without having to risk their personal or company assets. Although, Kabbage does demand a personal assurance in the form of a legally-binding contract that states that the loan will be repaid.

Eligibility and documents required

When it comes to the qualifications, Kabbage has two prerequisites that are pretty straightforward.

  • First, the borrower’s business should be at least a year old.
  • Second, their annual income should be around $50,000 or roughly $4,500 a month.

If a borrower meets these basic qualifications, they are most likely to be eligible for a small business loan by Kabbage.

An added advantage of taking a loan from Kabbage only mandates the borrower to submit bank statements for validating the financial stability of the business. Although, in the case of applications that require huge investments, it is always in the best interest of the borrower to have other forms of paperwork ready, such as tax returns, balance sheets, or expense reports.

Interest rate and loan term (fees)

Kabbage offers short-term loans, i.e., lasting anywhere from 6 to 12 months. Usually, borrowers approaching Kabbage opt for a 6-month period. These short-term loans have a rate of interest that varies every month. At the moment, they have one of the most expensive APR (annual percentage rates) on the market, i.e., the estimated range is between 24% and 99%. However, the interest rate tends to get lower as the borrowers pay off the loan. The interest rate will primarily be based on the business’ current financial situation as well as past records.

Kabbage does not charge a prepayment penalty, however, a borrower would not really benefit from making early payments. This is because an entrepreneur will have to repay a substantial chunk of the loan to Kabbage in the first 2 to 6 months of the term.

Application process

The application process for a small business loan at Kabbage is easy as it simply requires a couple of minutes. You can do it online or over a phone call. While filling out the form, the borrower needs to provide some basic data such as personal and business details including the name of the company, address, contact information, and annual income. Likewise, the borrower has to give Kabbage a read-only access to their bank account and other payment mediums such as PayPal. This information will be utilized to determine the maximum line of credit and monthly expenses. Currently, Kabbage offers small loans ranging between $2,000 and $250,000.

In the next stage, Kabbage will thoroughly evaluate the credit reports of the potential borrower. At the moment, Kabbage does not disclose the minimum credit score cutoff expected to qualify for a loan, however, one’s credit and payment history will hugely influence them to comprehend the risk involved. Based on the results, an algorithm will decide the fees to borne by the borrower.

As mentioned before, it only takes brief time i.e., approximately 10 minutes to get approved for a Kabbage loan. However, if the system is encountering challenges while verifying the information, the process can take some time to finish. Furthermore, if the borrower has requested for a higher line of credit, then they might be obliged to give additional documents for verification to Kabbage.

Kabbage