Kabbage VS Fundbox: Which Lender Is Best For Your Small Business?
In the past, getting a business loan was a hassle. Strict requirements, in-person visits to a bank or lending institution, and weeks of waiting could result in a low-cost, long-term loan option … or you could go through the process only to receive a big fat “NO.”
With the rise of the internet has come the emergence of alternative lenders – lenders with easy online application processes, fast approvals, and low requirements.
Kabbage and Fundbox are two leading alternative lenders, providing small business owners with the funding they need to operate or expand their businesses. While the two have similar product offerings, there are a few significant differences. In this post, we’ll compare the two side-by-side, breaking down the features of each to help you decide which is best for your business.
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Through Kabbage, you can receive a flexible line of credit to cover business expenses. Kabbage has one of the highest borrowing limits among alternative lenders that offer lines of credit, providing qualified borrowers with $2,000 to $250,000. Your line is determined by the performance of your business.
Fundbox also offers lines of credit but with lower borrowing limits. With Fundbox Direct Draw, the lender’s traditional line of credit, you can be approved for a maximum of $100,000. Like Kabbage, Fundbox’s lines of credits are based on the performance of your business.
Borrower requirements for Fundbox Direct Draw:
If you have unpaid invoices, you can take advantage of Fundbox Credit, the lender’s accounts receivables financing service. You can receive a line of credit up to $100,000 based on your unpaid invoices. You can only get one financial product through Fundbox, so you can qualify using either your unpaid invoices or your bank statements. We’ll go into borrower qualifications and the application process in more detail later in this article.
Borrower requirements for Fundbox Credit:
With both lenders, there are no restrictions on how you use your funds. You can use your lines of credit to purchase inventory or supplies, cover payroll, pay operational expenses, expand your business, or take care of an emergency.
While both lenders offer similar products, Fundbox comes out on top because you can also use your accounts receivables to qualify for a line of credit.
Time In Business
$50,000 per year
$50,000 per year
Minimum Credit Score
At least 2-3 months using compatible software/services
Qualifying for Kabbage is easy for most small business owners. To qualify, you must meet two minimum requirements:
- At least 12 months in business
- At least $50,000 in annual revenue OR at least $4,200/month for the last 3 months
Your personal credit score is not a consideration, as Kabbage bases approvals on business performance. However, a hard pull on your credit will be initiated during the application process.
Qualification for Fundbox is based on the product you select. For the Fundbox Direct Draw line of credit, you must meet the following requirements:
- A business checking account
- At least $50,000 in annual revenue
- At least 3 months of transactions in a business bank account
To qualify for Fundbox Credit invoice financing, requirements are similar. You must have:
- A business checking account
- At least $50,000 in annual revenue
- At least 2 months of activity in supported accounting software
With Fundbox’s invoice financing, you’ll link your accounting software to determine if you qualify. Fundbox currently supports 10 accounting software programs including QuickBooks Desktop, QuickBooks Online, Ebility, Harvest, InvoiceASAP, Jobber, Kashoo, FreshBooks, Zoho, and Xero.
It’s easy to see that both Kabbage and Fundbox have more lenient requirements than other lenders. However, Fundbox has the edge in this round because it doesn’t have time in business requirement. With Kabbage, you must be in business for at least a year. With Fundbox, newer businesses can qualify for funding provided they meet all other requirements.
Terms & Fees
Up to $250,000
Up to $100,000
6 or 12 months
Draw Term Length
12 or 24 weeks
1.5% - 10% of the borrowing amount per month
Starts at 4.66%
Now, let’s explore one of the most important factors of small business financing: how much does it cost? One area where both Kabbage and Fundbox are similar is that both lenders offer transparent fee structures. However, when you break down the terms and fees of each, there are several notable differences.
Kabbage offers terms of 6 months for draws under $10,000. For draws of $10,000 or more, you can select from terms of 6 or 12 months. Through Kabbage, you make monthly payments that apply to your principal plus fees.
Kabbage charges a monthly fee each month you have a balance. Fees range from 1.5% to 10% of the total amount of the loan and are based on the performance of your business. Your fee rate may be lower as you pay off your loan. For example, if you have a 12-month loan, you may pay 3% for the first six months and 1.25% for the last six months. Of course, this is just an example, and you won’t know what rates you’ll receive until you apply for a line of credit.
If you pay your loan off early, there are no prepayment penalties and you will eliminate any remaining fees, so this is a good way to save money.
With each draw, you will receive a breakdown of your loan, including the total amount of fees and the amount of each monthly payment. Your loan documents will include the SmartBox Capital Comparison Tool that will provide information including the disbursement amount, repayment amount, terms, and APR.
Other than the monthly fee, there are no hidden fees or additional costs to make a draw from your line of credit. If you do not use your funds, you will not pay any fees.
Fundbox has repayment terms of 12 weeks or 24 weeks. Weekly payments are applied to your principal plus fees.
Fees and terms are the same for Fundbox Credit and Direct Draw. Fees start at 4.66% of the draw amount and are based on the performance of your business. If you pay your balance off early, all remaining fees are waived.
You will be able to view your fees and repayment schedule after you’re approved for a Fundbox line of credit and initiate a draw. Your borrowing amount plus fees are equally distributed, so you will pay the same amount each week.
Breaking down the APR of each lender makes it a little easier to compare. Fundbox APRs are between 13% to 60%, while Kabbage’s APRs are between 20% and 80%. Based on these numbers, Fundbox appears to be the less expensive option, but you may find Kabbage to be more affordable (your own personalized rates are based on the performance of your business).
The Application Process
Kabbage and Fundbox have similar application processes, but let’s break down each so you know exactly what to expect.
It’s possible to apply for and receive a Kabbage line of credit in just minutes with the lender’s easy online application. Once you’ve determined that you meet all minimum requirements, you can start the application. This requires basic information about your business including your business name, address, and phone number. At the beginning of the application process, you’ll also enter your email address and create a password that you’ll use to log into your account.
Next, you’ll connect your business accounts to determine 1) if you qualify for a line of credit and 2) your credit limit if you’re approved. You can securely link your bank account from institutions including US Bank, Citi, USAA, PNC, Chase, and Bank of America. You can also link to other business services with revenue transactions, such as PayPal, Square, eBay, Stripe, or Sage.
Finally, you will be required to provide Kabbage with personal information, including your Social Security Number. At this point in the process, a hard pull on your credit will be performed.
Once you’ve submitted your information, you’ll receive a notification of your approval status in just minutes. If approved, you’ll be taken to your Kabbage Dashboard, where you can view your available credit facility and initiate draws. You can make a draw up to and including your credit limit immediately, but there is no obligation to withdraw funds at this time.
After you’re approved, you can also link additional business bank accounts and services to qualify for a higher line of credit. Your linked business bank account will be used for automatic drafts once you have taken funds.
One final thing to note about Kabbage is that you can be approved for a line of credit of up to $150,000 on the spot. Qualifying for funding up to $250,000 requires a manual review.
After you’ve been approved for a Kabbage line of credit, you can request the Kabbage Card. If you request funds to be sent to your bank account, you’ll see the money in 1 to 3 business days. However, the Kabbage Card gives you immediate access to your line of credit.
The Kabbage Card can be used anywhere Visa cards are accepted. Simply swipe your card to make your purchase, and Kabbage will create a loan with the same rates and terms as a traditional line of credit draw. There are no additional fees, and anyone that qualifies for a line of credit can request a Kabbage Card at no cost.
Fundbox has a very similar application process. Start by signing up on the website with your name, business email, phone number, and a password. You will also be required to select the annual revenue of your business.
The next step involves linking an account so that the lender can analyze the performance of your business. If you have invoices, you can link your accounting software. If you do not invoice customers, you can qualify for a line of credit by linking your business bank account.
During the application process, a soft pull on your credit is performed. This will not affect your credit score. However, if you are approved for a line of credit and take funds, a hard pull may be performed.
Most borrowers will know within minutes if they are approved and the amount of the credit line. Once approved, you’ll be able to request funds immediately. Those funds will hit your bank account within 1 to 3 business days. Your linked bank account will be used for automatic drafts of your weekly payments.
Kabbage and Fundbox have similar application processes. Both are automated, easy, and can provide you with instant approvals. In this category, the win came down to the Kabbage Card. The ability to easily sign up for the Kabbage Card, which gives you access to your credit line anywhere Visa is accepted, gives Kabbage the edge.
And The Overall Winner Is …
Although Kabbage and Fundbox have similar product offerings, Fundbox comes out on top. Its relaxed borrower qualifications, invoice financing service, and competitive rates and terms make it a top choice for many small business owners.
However, you may find that Kabbage’s monthly payments, longer repayment terms, and access to fast cash with the Kabbage Card are more suitable for your small business.
Which Is Best For Your Business?
While Kabbage and Fundbox appear similar on the surface, there are a few clear differences that can help you make your choice between the two. The biggest differences to note include:
- Kabbage payments are made monthly, while Fundbox has a weekly repayment schedule
- Maximum borrowing limits
- Time in business requirements
- You can use your unpaid invoices to qualify for a line of credit through Fundbox
Choose Kabbage If…
- You need a line of credit that exceeds $100,000
- You feel more comfortable making monthly payments
- You’ve been in business for at least one year
- You want payment terms up to 12 months
- You want to make instant purchases using the Kabbage Card
Choose Fundbox If…
- You’d prefer to make weekly payments instead of one larger monthly payment
- You’ve been in business for less than one year
- You want to use your unpaid invoices to receive a line of credit
Kabbage and Fundbox both offer value to small business owners that may not qualify for traditional business financing options. Although the cost of borrowing may be higher than other financial products, the speed of approvals and transfers, the ease of application, and the low borrowing requirements may be worth the extra expense for the business owner seeking fast funding.