LoanBuilder VS Kabbage: Which Lender Offers A Better Business Loan?
Both Kabbage and PayPal LoanBuilder have requirements that are friendly to credit-challenged or new businesses, but there are some key differences to be aware of.
Looking for an alternative lender for your small business capital needs, but you’re stuck choosing between LoanBuilder vs. Kabbage? Online lenders LoanBuilder and Kabbage have emerged as frontrunners among small business lenders providing capital to business owners that have low revenues, credit challenges, or new businesses. If you’re unsure which is best for you, then this post is for you.
We’ve put LoanBuilder and Kabbage head-to-head to help you make your best financial decision. We’ll take an in-depth look at the application process, break down terms and fees, and help guide you on your path to small business financing. Keep reading to learn more.
|Ideal For||Small businesses looking for a fast & easy short-term loan||Small businesses looking for a flexible business line of credit|
|Fees||2.9%-18.2%||2%-27% over the lift of the loan|
|Standout Features||Fast & easy application process; high borrowing limits; low revenue, credit score, and time in business requirements; no hidden fees||Fast & easy application process, monthly repayment schedule, line of credit, no hidden fees|
|What’s Missing||No long-term financing options, weekly repayment schedule||No long-term financing options, low borrowing limits|
Table of Contents
- PayPal LoanBuilder & Kabbage: Services Compared
- Kabbage: Best For Flexible Funding
- PayPal LoanBuilder: Best For Easy Short-Term Loans
- Borrower Qualifications
- LoanBuilder VS Kabbage: Terms & Fees
- Loan Application Process
- What Is The PayPal LoanBuilder Process To Get A Loan?
- Step 1: Fill Out The Online Questionnaire
- Step 2: If Declined...
- Step 3: Review Prequal Offer
- Step 4: Select Terms
- Step 5: Review & Accept Loan Offer
- Step 6: Receive Funds
- What Is The Kabbage Loan Application Process?
- Step 1: Apply Online
- Step 2: Link Business Accounts
- Step 3: Provide Requested Information
- Step 4: Review Approval Decision
- Step 5: View Credit Limit & Initiate First Transfer
- Step 6: Receive Funds
- Which Is Better For Your Business Loan Needs, LoanBuilder or Kabbage?
- FAQs: LoanBuilder & Kabbage Loans
- Comparing LoanBuilder & Kabbage: Final Thoughts
PayPal LoanBuilder & Kabbage: Services Compared
Both LoanBuilder and Kabbage provide fast and easy access to small business financing. But while LoanBuilder provides short-term loans up to $500,000, Kabbage offers flexible lines of credit up to $250,000.
LoanBuilder provides capital to small business owners through short-term loans. When you apply for a LoanBuilder loan, you can receive between $5,000 and $500,000 for your business. Once approved, you’ll receive one lump sum of cash that can be used as working capital, for an emergency, to expand your business, or for any other business purpose.
Customize Your Loan
One of the benefits of a LoanBuilder loan is that you can “build” your own loan. With the LoanBuilder Configurator, it’s possible to check out different options to find the best financing solution for your business. You can easily adjust the borrowing amount and terms to compare your options. For example, if you want low monthly payments, select a longer repayment term and lower borrowing amount. If you’d rather reduce your fixed fee, opt for a shorter term.
If you want more flexible financing, a Kabbage loan is the better choice for your business. Through Kabbage, you can receive a line of credit with a limit of $1,000 to $250,000.
A Kabbage line of credit is significantly different from a traditional loan. Loans — like the ones available through LoanBuilder — are sent to your bank account in one lump sum. Once you’ve paid off the loan, you’ll have to reapply to receive more money. With Kabbage’s line of credit, you’ll be assigned a credit limit, and you can make one or more draws up to and including that credit limit. Each payment is applied to your balance plus fees. As you repay borrowed funds, they’ll become available for you to use again — no additional approvals needed.
Funds When You Need Them
One of the best things about a Kabbage line of credit is that you don’t have to use it immediately. With a traditional loan, you are still required to make regular payments, even if the funds sit untouched in your bank account. With a line of credit, though, you won’t have to make payments until you request a transfer of funds. This makes it a much better option for those “what if” scenarios you can’t predict.
Kabbage: Best For Flexible Funding
Kabbage is a great choice if you want a flexible funding option. In addition to being able to make draws against your line of credit as needed, funds are replenished as you make your payments. Therefore, you can always access capital when you need it until you meet your maximum borrowing limit. And if you do hit your credit limit? Simply pay down your balance to begin borrowing again — no additional credit applications needed.
- Easy application process
- Monthly repayment schedule
- Fast disbursement of funds
- No hidden fees
- High fees
- No long-term financing options
- Personal guarantee required
PayPal LoanBuilder: Best For Easy Short-Term Loans
LoanBuilder is a solid choice if you want an easy short-term loan without the hassles of using a traditional lender. PayPal LoanBuilder has relaxed borrower requirements, high borrowing limits, and a transparent fee structure. The application process is fast and easy, and you can have access to your funds within days of getting approved.
- Easy application process
- Fast disbursement of funds
- Low credit score requirements
- No hidden fees
- No-long term financing options
- Blanket lien required
- Potentially high cost of borrowing
|Time In Business||9 months||12 months|
|Minimum Credit Score||620||640|
PayPal LoanBuilder Borrower Requirements
Even if you’ve been turned down for a small business loan in the past, you may still qualify for funding through LoanBuilder. Unlike traditional lenders, LoanBuilder has more flexible criteria for receiving one of its loans.
To qualify for a LoanBuilder loan, you must meet the following minimum requirements:
- US-based business in a qualifying industry
- Time in business of at least nine months
- At least $42,000 in annual revenue
- No active bankruptcies
- A personal credit score of 620 or above
Please note that these are minimum requirements, and meeting these minimum requirements does not guarantee your approval.
You can review your offers during the application process with no impact on your credit score. If you decide to move forward with applying for and accepting a loan, a hard credit pull will be initiated by LoanBuilder, which may have a small impact on your credit score.
Kabbage Line of Credit Borrower Qualifications
If you’d prefer a business line of credit, it’s also fairly simple to qualify with Kabbage. The minimum requirements of Kabbage are:
- In business for at least one year
- $3,000/month for the last three months
- A personal credit score of 640 or above
Kabbage looks at the performance of your business when determining whether to approve your line of credit. However, a hard pull will be performed to check your personal credit.
LoanBuilder VS Kabbage: Terms & Fees
|Term Length||13-52 weeks||6, 12, or 18 months per draw|
|Borrowing Fee||One-time fee of 2.9%-18.72% of the borrowing amount||2%-27% of the borrowing amount per month|
Before we break down the costs between LoanBuilder and Kabbage, note that these are alternative lenders that provide funds to borrowers with less-than-perfect credit. (If you have credit worries and you need a loan to start a new business, check out our post on the best loans for startups with bad credit.) As such, these financial products have a higher cost of borrowing than traditional loans you’d receive from your bank or credit union.
LoanBuilder Simplifies The Cost Of Borrowing
A great feature about LoanBuilder loans is that just one fixed fee is charged, making it easy to understand the cost of borrowing. Fees range from 2.9% to 18.72% of the borrowing amount. The most creditworthy borrowers will be rewarded with the lowest fees. There are no origination fees or additional costs added to your loan.
LoanBuilder loans have terms between 13 to 52 weeks. Terms are based on the amount of your loan. Each week, payments are automatically withdrawn from your business bank account.
Kabbage’s Fee Structure & Repayment Terms
Kabbage’s fee structure is a little different. A fee is charged each month when there is a balance. Fees range from 2% to 27% and are based on the performance of your business. Your fees may change throughout your repayment period. For example, you may pay a 3% rate for the first six months, then pay just 1.25% for the remaining six months. This is just an example, and your actual fees may vary.
Kabbage has repayment terms of six, 12, or 18 months based on the amount you borrow. If you borrow less than $10,000, your repayment terms will be set at six months. If you borrow $10,000 or more, you can choose between terms of six, 12, or 18 months. Payments are withdrawn monthly through automatic drafts of your business bank account.
LoanBuilder For Weekly Payments
If you prefer to make weekly payments, LoanBuilder is the better choice between the two lenders. If you want a loan with a single fixed fee structure that’s easy to understand, LoanBuilder is also the better option. However, if you’d prefer to make one monthly payment, consider applying for a Kabbage line of credit.
Loan Application Process
You can fill out an application online for both PayPal LoanBuilder and Kabbage. Each application takes just minutes to complete, and approval and funding are also quick and easy. Let’s take a closer look at the application process for each lender.
What Is The PayPal LoanBuilder Process To Get A Loan?
What Is The Kabbage Loan Application Process?
Both LoanBuilder and Kabbage simplify the loan application process. However, Kabbage does have a slight advantage because its simple application process is hassle-free and has no documentation requirements.
Which Is Better For Your Business Loan Needs, LoanBuilder or Kabbage?
LoanBuilder and Kabbage are similar in that they offer alternative financial solutions for business owners that may not qualify for other loans or financial products. However, there are distinct differences between the two. Determine how much you need to borrow, nail down how you plan to use the funds, and make your decision from there.
Choose PayPal LoanBuilder Business Loans If…
- You prefer to make smaller weekly payments rather than a larger monthly payment
- You want one lump sum of money that can be repaid over time
- You need to borrow more than $150,000
Choose Kabbage Business Loans If…
- You’d rather make monthly payments
- You want a flexible line of credit that you can use when you need it
- You want instant approval with no hassles or paperwork
FAQs: LoanBuilder & Kabbage Loans
Comparing LoanBuilder & Kabbage: Final Thoughts
Kabbage and LoanBuilder both provide quick financial solutions for small business owners. However, don’t forget that this speed and convenience may come at a high cost. These are short-term options that may have higher fees than other financial products. Shop around with lenders, compare any offers you’ve received, consider other loans, such as accounts receivable financing, and evaluate the cost of any loan you choose to accept.
By doing your homework, you can better ensure you’re making the most financially-savvy move for your small business.
If you’re still undecided, check out our other resources, including our guide to getting a small business line of credit and our guide to short-term business loans.