Your Kabbage Line Of Credit: How To Apply, Withdraw Funds, & Set Up Repayment
Kabbage's lines of credit are ideal for business owners who want quick access to cash without a lengthy and difficult application process. From applying to withdrawing funds, here's everything you need to know.
Is a Kabbage line of credit right for you? As a business owner, you always have to be prepared for the unexpected. An emergency arises, a bill needs to get paid, you’re running out of inventory…you get the picture.
Have you ever found yourself in a situation where you knew you didn’t have enough funds to cover the expense comfortably? Have you struggled to deal with that knot in your stomach and a constant feeling of dread from wondering how you’ll get the capital you need? You’re not alone.
Or maybe you’re facing an entirely different challenge: business expansion. You’re ready to grow your business, but unfortunately, all of your funds are tied up in operational costs and other expenses. How can you expand your business and boost your revenue if you don’t have the capital you need?
Fortunately, there’s a solution for when you need cash quickly: a small business line of credit. With a line of credit from an online lender such as Kabbage, you don’t have to worry about waiting for days (or even weeks) for loan approval.
Kabbage specializes in small business lines of credit of up to $250,000. You can use your line of credit for any business expense, from buying supplies and inventory to paying a utility bill or covering payroll expenses. Kabbage’s flexible lines of credit can be used for emergency expenses or to expand your business.
This article does a deep dive into Kabbage’s lines of credit. From the application process to withdrawing funds, we’ll cover it at all to help you determine if your business should explore this financial path.
Table of Contents
- Check If You Meet Kabbage’s Minimum Borrowing Requirements
- Apply For A Kabbage Business Line Of Credit
- Review Your Rate & Borrowing Terms
- Withdraw Funds & Repay Your Kabbage Loan
- Is A Kabbage Line of Credit Right For Your Business?
Check If You Meet Kabbage’s Minimum Borrowing Requirements
The lending market is pretty screwy. How many other businesses interview you to see if they want you as a customer? Nevertheless, that’s how it works.
Luckily, Kabbage’s borrowing requirements aren’t too daunting. If you have credit challenges, it’s no problem — Kabbage looks at the performance of your business when issuing approvals. To be eligible, you must meet two minimum requirements:
- Be in business for at least 12 months
- Have at least $3,000 in monthly revenue
The required minimum personal credit score is 640 to qualify. Kabbage does perform a hard pull on personal credit during the application process. Your credit score will influence what your rates turn out to be.
Note that meeting these minimums isn’t a guarantee that you will qualify, only that you’ll at least be considered.
Apply For A Kabbage Business Line Of Credit
Once you’ve figured out whether or not you can meet Kabbage’s requirements, you’ll want to gather the information you’ll need to make your application process go smoothly. You can start the online application, which takes just minutes to complete.
Step 1: Business Information
To get started, the application requests information about your business, including:
- Business name
- Business address
- Business phone number
You will also enter your email address and set a password in this first step. This will be your login information for accessing your account on Kabbage’s website or mobile app.
Next, you will provide more information about your business. This information includes:
- Industry type
- Company structure
- Date established
- Tax ID number
- Annual revenue
You will be asked if you own at least 75% of equity interest and have significant responsibility in managing the business.
Step 2: Connect Accounts
Next, you will connect to your bank account or business services so that Kabbage can review your transactions to see if you’re eligible for a line of credit. In this step, you add the bank or service with the most revenue transactions. You can add additional accounts and services later.
Kabbage can connect directly with multiple banks, including Chase, Wells Fargo, Bank of America, BB&T, Capital One, and SunTrust, just to name a few. You can also connect business services, including but not limited to PayPal, Stripe, Sage, Square, eBay, Amazon, and QuickBooks.
Step 3: Personal Information
Once you’ve connected your account, it’s time to provide personal information to Kabbage. This information includes:
- Date of birth
- Social Security number
- Phone number
Once you input this information and hit “Submit,” Kabbage will perform a hard pull on your credit. Remember, though, Kabbage focuses on the performance of your business — not your credit score.
An approval decision will be made once Kabbage’s system analyzes your credit history and your account transactions. Within minutes, you’ll be able to see if you’ve been approved for a line of credit. Once approved, you’ll have access to the Kabbage Dashboard, which features your full credit limit and options for withdrawing funds. You can withdraw the full amount or select the amount and terms that work for you.
Review Your Rate & Borrowing Terms
|Borrowing Amount||Up to $250,000|
|Draw Term Length||6, 12, and 18 months|
|Borrowing Fee||2%-27% of the borrowing amount per month|
Once approved for a Kabbage line of credit, you can use the Dashboard to initiate draws, view information about previous loans, see account details, and view or add linked accounts. Account details show the percentage of funds utilized, your next statement date, your next due date, and the minimum amount due.
How To Review Your Kabbage Payment Schedule
To review your rates and terms, select an amount to borrow as if you were initiating a draw. Once you’ve chosen the amount and terms, Kabbage will provide a breakdown of your payment schedule. This schedule shows the date of each payment, the principal amount that will be paid, the rate charged for that payment, the fee amount, and the total amount due for each month. Below your monthly schedule, you’ll find the new loan amount, the total amount of fees you will pay, and the total cost of the loan, including the principal plus fees.
How To Use Kabbage’s Loan Calculator
Kabbage also has a loan calculator on its website if you haven’t yet applied. While you won’t know the specific fees, credit limit, and other details until you apply, this can give you an idea of whether or not this financial product is an option that will work for your business.
Kabbage provides you with a summary of your fees when you initiate a draw, but how is this calculated? The lender charges a monthly fee each month that you have a balance. Fees range from 2% to 27% and are based on the performance of your business. This monthly fee gets added to your principal balance, which is divided evenly across your term length.
As you pay down your balance, your fees will be reduced. For example, you may pay 3% for the first six months of your loan, then pay just 1.25% for the last six months. There are no prepayment penalties, so you can pay off early and save.
How To Estimate Your Total Cost of Borrowing
Kabbage is very transparent about its fees and your total cost of borrowing. On each loan agreement you make with Kabbage, you will find a SMART Box. The SMART Box provides important information, including:
- Disbursement amount
- Repayment amount
- The total cost of capital
- Average monthly payment
This gives you an overview of all your loan details, so there’s never any question on how much you are paying to draw from your Kabbage line of credit.
Withdraw Funds & Repay Your Kabbage Loan
How To Withdraw Kabbage Funds
Once you’ve opened your Kabbage line of credit, you’re eligible to take draws immediately. Through the Kabbage Dashboard, you can make a draw on your line of credit in just a few easy steps.
Select the amount you’d like to withdraw up to and including your total credit limit. Once you’ve selected your loan amount and terms, you’ll be able to view your repayment schedule. If you approve of the repayment schedule, you can continue to review the loan. The next step will include reviewing the details of your loan and the linked bank account information; if everything looks good, e-sign the agreement and submit it. You should then expect to see the funds in your checking account within one to three business days.
How To Set Up Kabbage Loan Repayment
Kabbage makes it easy to repay your loan by using your linked checking account for ACH withdrawals on your due date. Each month, you’ll receive a statement approximately two weeks before your due date. On your Kabbage Dashboard, you’ll be able to view the date of your next statement, your next due date, and the minimum amount due. This amount will be automatically withdrawn from your business checking account on your due date.
You also have the option to make a manual payment to your account through the Dashboard. You can select the minimum monthly payment, the entire amount, or another amount. Making a manual payment is an option you can use if you want to pay down your balance or pay your loan off early.
If you have more than one loan, you will still just have one monthly payment. You can learn more about each loan through the “Details by loan” tab in your Kabbage Dashboard. This provides you with an overview of each loan you’ve taken, including the date it was drawn, the original loan amount, and remaining balances.
Quick Tip: Draw Only The Funds You Need
Remember that technically you have no obligation to take funds offered to you. While that might sound like it defeats the purpose of having a line of credit (rainy day fund security notwithstanding), don’t feel pressured to draw on your line unless you need to.
Is A Kabbage Line of Credit Right For Your Business?
Kabbage’s lines of credit are ideal for business owners who want quick access to cash without a lengthy and difficult application process.
However, it is important to note that these lines of credit do come at a cost. Monthly fees added onto your principal balance are steep compared to low-interest, long-term financing options.
That said, if you need business capital quickly and without hassles, the return-on-investment may be worth the additional costs. Check out our full Kabbage loans review to learn more about this lender and its lines of credit.