The process of incorporating your business will differ based on…
Kabbage Business Loans
Find Out if You’re Eligible
Credit Line Solution
Your Kabbage Credit Line Solution Checklist:
Range of Financing
$2,000 – $250,000
6, 12, or 18 months
1.5% – 10% per month
Minimum requirements to qualify for Kabbage Credit Line Solution:
- Minimal Yearly Revenue: $50,000 (or $4,200 per month for the last three months)
- Your Credit Score: No Minimum
- Minimum Age of Business: 1 year
Application Check List
- Provide your business name, type, and industry
- Business tax ID number
- Your social security number
- A business checking account
- If you use accounting software, at least three months of records
You Should Know That:
- Average funding speed: is two to seven business days.
- They require a $2,500 minimum average bank balance for eligibility.
- Personal bankruptcy? You can still qualify after one year has passed since discharge.
- Only those with at least 1% ownership should apply.
You Also Need This Information
Kabbage Funding will withdraw your minimum payment monthly. Additionally, you can also make payments any time you choose.
Every month, you will repay an equal portion of the loan principal plus the monthly fee. The lender charges a monthly fee for each month you have a balance for their six- or twelve-month business lines of credit. On the eighteen-month credit line, the monthly charge fully accrues when you get funded and an equal portion of the fee gets paid each month for 18 months, regardless of your balance over that time.
This is Kabbage Funding’s system for front-loading a borrower’s interest to their first two months for six-month repayment terms and to their first six months for 12-month repayment terms. Fees remain consistent each month for their 18-month solution.
Kabbage charges one monthly fee that includes processing, underwriting and interest. There are no additional application fees, origination fees, annual fees, monthly maintenance fees, or documentation fees.
They don’t charge a prepayment penalty.
They do charge a late fee for late payments that varies according to the balance on your account. A four-day grace period is extended to lenders before Kabbage levies this fee.
Loan funds can become available the same day you apply, or it can take up to three business days to get funded. The timeframes depends on your choice of accounts (e.g., checking account or PayPal account).
If you work with the Kabbage dashboard or mobile app, you can withdraw a minimum of $500 in any increment.
Kabbage does a hard credit pull from Experian with the borrower’s consent after you accept an offer.
Kabbage Funding requires a personal guarantee from the business owner. In selected circumstances, Kabbage may be required to file a general lien on your business
Kabbage Underwriting Process
Once you meet Kabbage Funding loan requirements, you can embark on your journey via the online application. Next, create a Kabbage account using your email and creating your password, and then you can provide basic business and personal information such as your name, the business name, both your home and business addresses, phone number, business sector, your business EIN, and your social security number.
The next step is to add your financial software and accounts. This includes your business checking account, plus any other online services including Amazon, eBay, Xero, Stripe, PayPal or QuickBooks. You will be required to provide the login information for each account.
The best way to do this is to sync up as every service you can so you can demonstrate multiple revenue streams. This will increase your chances of qualify for a credit line. They use your synced accounts as a basis for underwriting your loan. Again, the more accounts you link to your application that show your revenue and business performance, the more data they have to underwrite your line of credit.
Once you’ve connected your accounts, Kabbage uses an algorithm to conduct the underwriting process. They can get you an approval decision within just a few minutes. Upon approval, they immediately show you the amount of your line of credit, the terms they are offering you for repayment and your interest rate. Some borrowers will be offered the option of a six-, 12-, or 18-month repayment term.
Once you sign your loan agreement, your funds will be delivered to your preferred account. You can use either your business checking account or your PayPal. PayPal processes your funds within minutes. Alternatively, you can select your business checking account, where it may take up to three days to receive funds. You can begin drawing money from your credit line as soon as you receive them and you’ll only pay for funds that you withdraw.
Bear in mind that the application process often takes longer for credit lines above $200,000 and in those cases where Kabbage Funding needs more time to properly verify your information. If you don’t get approved the first time you apply, their algorithm will continue to review your business using the linked accounts. They will notify you if in the future you meet their business line of credit requirements. Your account will also be reevaluated periodically to potentially update your credit line or your fees.
The Post-Funding Experience with Kabbage
When you get funded, you can draw from your revolving line of credit once a day—and you can do it on the Kabbage mobile app or online dashboard. As usual with lines of credit, you pay interest only on what you take out.
You’ll get information on your entire repayment schedule during underwriting —that will ensure you have the details you need to start making your payments. Kabbage will automatically deduct the minimum monthly payment from your business bank account. You can make additional payments manually when you wish. Also, you’ll can access your payment plan and schedule on the dashboard. Your credit line activity will not affect your credit scores, because Kabbage does not report to personal credit bureaus or business credit bureaus.
Your monthly payment is comprised of an equal portion of the loan principal plus a fee. Monthly fees range from 1.5% to 10% of the total amount you borrowed. Kabbage charges a monthly fee for each month you have a balance for their six- or twelve-month business lines of credit. On the eighteen-month credit line, the monthly charge fully accrues when you get funded and an equal portion of the fee gets paid each month for 18 months, regardless of your balance over that time. Interest on the six-month and twelve-month loans is front-loaded. That means you will pay a higher fee in the first two months of a six-month loan and in the first six months of a twelve-month loan. The fee on the 18-month loan is the same every month throughout the term of the loan.
There are no prepayment penalties, so customers using the six- or twelve-month loans can save on the monthly fees if they can repay borrowed funds early. As stated earlier, you can manage your payments, see past activity, and preview potential payments for any new loans you make using your dashboard.
Kabbage Funding: The Cons
Kabbage Funding can process your application quickly to give you fast and easy access to capital, but you pay you for this convenience. If you were to convert their monthly fees to an annual percentage rate (APR), you’ll see that their fees are high indeed. Also, if you get approved for a credit line with a monthly fee in the higher range, your APR could be as high as 100%.
On top of lofty interest rates, Kabbage Funding doesn’t report to credit bureaus. You would want to work with a lender who reports good behavior on your business loan to the credit bureaus if you need to build or repair your credit score and step up to more affordable business financing.
That said, in general, you should always try to get the lowest-cost loan possible. So, if you can qualify for a less expensive one, you are advised to consider that option over the Kabbage Funding Credit Line Solution. To determine if you can afford a Kabbage Funding loan, take advantage of our Kabbage business loan calculator and enter your numbers on your credit line offer.
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