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Kabbage Business Loans Review
Fast and flexible, Kabbage is a great option for businesses with shaky credit scores.
Kabbage offers fast, flexible, and secure loans for small businesses. Although Kabbage loans may not have the most competitive rates in the game, it can be a good option for small businesses with poor credit or those who need funds quickly. Kabbage also offers loans with relatively short repayment periods, ranging from six to 18 months. While Kabbage business loans may present a good deal for some, borrowers should always shop around to ensure that they’re getting the best rates possible for their particular situation.
Kabbage business loans at a glance
|Lender||Loan Amount||APR||Terms||Key Benefits|
|Kabbage||Up to $250k||24% – 99%||6 – 18 months||Accepts borrowers with poor credit|
What we like about it
One of the main upsides to Kabbage is that it is fast, flexible, and convenient. It finances loans up to $250,000, with funds usually available within a few business days. Businesses can even have funds deposited in as soon as one business day if using a PayPal account. For businesses that need cash fast, this ease and flexibility is definitely a point in Kabbage’s favor.
Kabbage also accepts borrowers with low credit scores, which can be a boon for businesses with shaky credit histories. Instead of basing eligibility on credit score, Kabbage evaluates risk based on a combination of factors, including annual and monthly revenue and cash flow.
Another positive aspect of Kabbage is that the application process is fast and simple, making Kabbage an accessible, approachable lender for the average borrower. Kabbage is light on paperwork, and only requires enough financial information about your business in order to determine your eligibility. Kabbage also doesn’t charge a prepayment penalty, meaning that you’re free to pay back your loan in its entirety at any time.
Things to consider
Although it is fast and flexible, Kabbage does have higher rates than many other lenders. In many cases, borrowers may be able to find more favorable terms elsewhere, making Kabbage a less than ideal option for those with decent credit. In most cases, Kabbage should be used by borrowers unable to secure better terms with other lenders.
Kabbage also offers short repayment terms of 6 to 18 months. While some borrowers may appreciate a short-term loan, others may be better served by longer terms with more flexibility. Kabbage also isn’t the best choice if you’re looking to finance large purchases, such as a move or renovation, that you might need to pay off over a longer period of time.
Kabbage also has a complicated fee structure in which borrowers pay a large portion of the total fees over the first few months. Fees can range from 1% to 10% of the total amount borrowed for the first few months, and then 1% of the total amount borrowed thereafter.
What you need to know
Kabbage can be a decent alternative for small businesses with poor credit looking for a short-term loan. The lender offers loans of up to $250,000 and accepts borrowers with less than stellar credit provided they have a steady stream of income. With an APR range of 22% to 99%, Kabbage has less competitive rates than many other similar lenders and presents a more expensive choice for most borrowers. Term lengths for loans tend to be on the shorter side, with a range of six to 18 months. Additionally, businesses must have been in operation for at least one year in order to be eligible for a loan.
Overall, while Kabbage provides fast, flexible small business loans for those without good credit, many borrowers may be able to find better rates elsewhere.
Fees and penalties
Kabbage charges a monthly fee to borrowers, which varies depending on the size of the loan and the length of the term. Fees range from 1% to 10% depending on a variety of factors. In most cases, fees are front-loaded towards the beginning of the loan repayment period and taper off toward the end as the loan balance becomes smaller.
Kabbage doesn’t charge a prepayment penalty, so borrowers are free to pay off the remaining balance on their loans at any time. However, since many of the fees are charged during the first few months of the loan’s term, paying off the loan early may not save borrowers much money.
How to apply for a Kabbage business loan
The application process for a loan from Kabbage is entirely online. The application is fairly straightforward and only takes a few minutes to complete. Be prepared with some basic information about your business, including your name, address, and access to bookkeeping accounts. Borrowers should be aware that an application for a loan from Kabbage does trigger a hard pull on your credit report. Here’s how to apply for a loan with Kabbage:
- Create an account.
- Provide information about your business including your business name, address and phone number.
- Provide additional information including your industry and annual revenue.
- You’ll also be asked to provide personal information including your name, address and social security number.
- Then, connect an account that demonstrates your yearly income. Options include Bank of America, Wells Fargo, PayPal, QuickBooks and more.
- Kabbage will use your financial information as well as a hard credit inquiry in order to determine whether or not you’re eligible for a loan.
Alternatives to Kabbage
While Kabbage is a great option for borrowers with poor credit who need cash fast, there are a variety of other options that may offer better rates.