Have you ever thought of owning your own business? Many people considering starting a business but never follow through. There are many reasons why people fail to initiate a new business idea. Sometimes we have other responsibilities in our lives that take precedent over side projects. But other times, even if we have the time and motivation to start a business, we don’t have the funds. Starting a business can be expensive. That’s where small business lenders like Kabbage can help.
On the front page of its website, Kabbage states that it offers small business loans for the “real world”. Kabbage is likely alluding to the difficultly that many small startups have when applying for business loans. It is notoriously difficult to receive a small business loan. According to one of Kabbage’s major competitors, OnDeck, 82% of small businesses are denied when applying for a loan from their bank. The company instead offers a hassle-free and digital alternative to traditional small business lenders. By utilizing the power of the internet, Kabbage has found a way to side-step some of the biggest issues of small business funding to offer small businesses with less than perfect credit, quick funding of short-term business loans.
Kabbage’s service offers up to a $100,000 line of credit to small businesses, either on a 6 or 12-month term limit, which can be withdrawn all at once or as needed. Applicants can qualify in as little as 10 minutes, provided that the applicant has correctly filled out the form and no additional security checks are required. Once approved for a loan, you and your business will be able to withdraw funds quickly and conveniently – up to once per day. Kabbage already has provided more than $3 billion in funding to more than 100,000 businesses throught the United States.
Kabbage offers a simple three step process to get funding for small businesses quickly and efficiently. First, using either their mobile app or online platform, enter your basic business information, including revenue. Second, Kabbage will process your information and determine the most reasonable loan size possible. Finally, the funds the disbursed to your account within just a few business days. Once funded, you can withdraw from your credit line up to once per day. To qualify for a business loan, you should be in business for at least one year and have a minimum of $50,000 in annual revenue or $4,200 per month over the last three months. Kabbage business loans are issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC.
Kabbage provides unsecured loans to all types of businesses for a variety of business uses:
However, there are two major issues with Kabbage that are related to each other. The lender’s ‘monthly fee’ charge is in reality an interest rate charge. Moreover, this interest rate is rather high. For example, using the company’s loan calculator you can simulate different loan situations. According to this tool, a $100,000 loan – with a ‘fee rate’ of 3% and a repayment period of 12-months – would have a total of $24,000 in ‘fee’ charges. Remember, these fees are in reality interest rate payments. In this case, you would be charged at a 24% interest rate ($24,000 / $100,000), which is a rather high interest rate. Although the ‘fees’ owed on loans through Kabbage can be a bit high, there are still many businesses who can benefit from a short-term small business loan of this type. Especially businesses with bad credit.
If you think this type of loan might suit you, then we recommend comparing Kabbage’s loan options with loans available from OnDeck too. OnDeck is another online lender that may be a better option for you depending on your business and its needs. With OnDeck you can get a small business loan up to $500,000 with a repayment term of 3 years. Visit OnDeck’s website to compare its features and benefits, and review loan types available.
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