Kabbage Funding Review: Is A Kabbage Line Of Credit Right For Your Business?

Pros

• Reasonable borrower qualifications
• No added fees
• No early payment penalty

Cons

• Rates can be expensive
• No long-term financing options
• Relatively low cap on loans

Kabbage Funding Overview

Kabbage is an online lending platform that offers lines of credit, business banking, and payment services to eligible businesses. Overall, it would seem difficult to find a more convenient lender than Kabbage.

Business owners can apply for loans ranging from $1,000 to $250,000. Once they get a decision on their rates and fees, they can start drawing funds. (Kabbage notes that some lending decisions may take four to seven business days.)

The speed comes at a price, though. Total monthly fees incurred over the loan term range from 2-9% for 6-month loans, 4.5-18% for 12-month loans, 6.75-27% for 18-month loans, and are subject to change for future loans drawn under the available line of credit. And while Kabbage doesn’t have a prepayment penalty, it’s important to note that Kabbage loans are front-loaded, with the majority of fees paid in the first third of the repayment period. That means you might not be able to save very much money by repaying early.

Despite the potentially high cost, there’s a lot to like about Kabbage. Keep reading to learn more!

Kabbage Funding Services Offered

Kabbage offers the following services:

• Kabbage Business Lines Of Credit: Kabbage Funding extends credit to a borrower, and the borrower can draw upon that credit at will up to a credit limit. Each new draw on the line of credit opens a new installment loan. Interest is paid monthly on the total amount of funding used.
• Kabbage Payment Services: The suite of services known as Kabbage Payments encompasses invoice processing, custom payment URLs, and card processing.
• Kabbage Checking: One of the newest Kabbage products is Kabbage Checking. Kabbage Checking offers a high APY, making it a solid option for small businesses that need business banking services.

Kabbage Funding Borrower Qualifications

To determine your eligibility for a Kabbage loan, the company reviews information about your bank accounts, prior credit, and repayment history. Expect to have your business’s average monthly revenue and transaction volume analyzed, among other metrics. You must have a valid business checking account to apply.

To qualify for a Kabbage loan, here’s what you’ll need:

You will need to consent to a credit check during the application process. This is a one-time hard inquiry, and it allows Kabbage to review the information within your report when considering approval. Applicants in fair to excellent categories are more likely to qualify.

Kabbage Funding Terms & Fees

These are the terms and fees stated on Kabbage’s website:

Kabbage loans have a term length of six, 12, or 18 months. Each month you repay 1/6th, 1/12th, or 1/18th of the principal, plus a fee.

This lender does not enforce a prepayment penalty, but keep in mind that Kabbage operates on a front-loaded fee structure. For the first two months of a six-month loan, the first six months of a 12-month loan, or the first nine months of an 18-month loan, your fee will be up to 3% of the original principal per month. For the remaining months of your loan, your fee will be 1% of the principal.

If you feel confused, take advantage of this very nice Kabbge Funding loan calculator on their website. Using the calculator may help you understand how the fees work and how the front-loaded structure affects your finances if you plan to pay off your loan early.

Be aware that, due to the way the fees are issued, Kabbage loans do not technically carry an APR. Payments are made monthly.

Other than the monthly borrowing fee, Kabbage does not charge additional fees. For example, you will not be charged origination fees, maintenance or servicing fees, unused line fees, or prepayment penalties. However, you can expect to pay late fees and fees for returned payments.

Before you get your loan, Kabbage will send you a SMART Box that will disclose everything you need to know to make an informed borrowing decision, including the total loan fee and the effective APR.

Kabbage Funding Application Process

The application process is completed online and requires you to share information about yourself and your business. You will also have to give the lender read-only access to your business bank account and any other data channels you use (such as Amazon, PayPal, and QuickBooks). Kabbage uses the information provided to determine your monthly fee and maximum credit line.

Kabbage will perform a hard pull on your credit during the application stage and use your credit history to help verify your identity and determine risk. Kabbage says a minimum score of 640 is required.

An algorithm decides your rates and fees. It generally only takes a few minutes for the system to determine whether to approve or deny your application. However, if Kabbage has trouble verifying information, the process might take four to seven business days. Kabbage might also request additional info to grant your credit line.

Once approved, you can begin requesting funds, which typically will be sent to your designated, verified bank account within three days. You will not incur any fees until you draw funds, and your repayment amount will depend on your outstanding balance.

Sales & Advertising Transparency

Kabbage fully discloses all numbers, fees, application procedures, and terms of service on its website. I’m particularly fond of its help center, which answers common questions, and the loan calculator, which can help you understand Kabbage’s unusual fee structure.

Before you borrow, Kabbage provides you with your loan details in a SMART Box, a standardized method of disclosing financial information that lets you easily compare offers. This box includes the total cost of capital, the APR, the average monthly payment, and the cents-on-the-dollar cost for easy comparison.

Customer Service & Technical Support

Kabbage has a wide array of self-help options in addition to several common contact methods. If you need help with your Kabbage account, these avenues are available to you:

• Phone: Phone support is available Monday through Friday, 8 AM-9 PM Eastern Time.
• Email
• Help Center: Find helpful information and answers to common questions in the searchable Kabbage Help Center online.
• Videos: Visit Kabbage’s YouTube channel for helpful videos and customer success stories.
• Social Media: Kabbage is active on Twitter, Instagram, LinkedIn, and Facebook.

Kabbage Funding User Reviews

Kabbage previously has boasted an A+ rating with the Better Business Bureau, but that’s no longer the case. Currently, the BBB website shows a decidedly less positive 3.26/5-star rating, based on an average of 587 customer reviews.

A quick glance through recent complaints shows that they’re almost without exception related to COVID-era PPP loans and specifically PPP loan forgiveness. The PPP program has ended, and it’s not entirely fair to judge Kabbage on one short-term and somewhat confusing special loan program. So let’s take a look at some other factors.

Kabbage Funding Reviews & Complaints

Here are the most common complaints we see online from users regarding Kabbage’s services:

• Rejections: Unfortunately, Kabbage cannot extend credit lines to all applicants. Even if you meet the company’s stated minimum requirements, you might be judged ineligible based on other information found during the application process.
• Expensive Fees: With variable fees, Kabbage loans can be pricey. If you are worried about cost, I’d recommend shopping around a bit before settling on a line of credit. Check out our list of the best business lines of credit for small businesses to see some other options you might be eligible for.
• Front-Loaded Fees: Kabbage has been criticized for its fee structure because you must pay the bulk of the fees in the early part of the repayment term. Although Kabbage technically doesn’t have a prepayment penalty, the front-loaded fees can make it difficult to save a significant amount of money by repaying early.
• Sudden Loan Limit Cut: Kabbage keeps an eye on your cash flow, so if your business is starting to slow down, Kabbage might reduce your borrowing limit or cut off your credit line entirely. If this happens, you’ll still have to repay any outstanding debt.

Positive Reviews & Testimonials

Kabbage has a rating of 3.5/5 stars on Trustpilot, based on over 6,700 reviews on that website. Overall, merchants are happiest with:

• Straightforward Application Process: Many customers appreciate how easy it is to apply for funding from Kabbage.
• Fast Access To Cash: Customers appreciated being able to draw on their lines of credit whenever needed. And they like how quickly the funds are made available to them.
• Good Customer Service: Though not all customers would agree, many say that Kabbage provides stellar customer service. In general, customers were generally pleased with the care they received from Kabbage.

Overall, Kabbage users seem to like the financial safety net provided by the line-of-credit-style structure. Once you get into the system, Kabbage capital is always there if and when you need it.

Is A Kabbage Line Of Credit Right For Your Small Business?

Kabbage Funding can be expensive, so we advise applicants to make sure they fully understand the cost before accepting a financing offer.

There are a lot of things to like about Kabbage Funding. Many businesses will be eligible for the service, the application process is straightforward, the capital is always accessible, and Kabbage doesn’t charge extra fees. Kabbage is very transparent — you’ll know everything you need before borrowing money, and you shouldn’t encounter any surprises.

However, we see two factors that could limit Kabbage Funding’s suitability as a small business lender. First, Kabbage’s funding options are all short-term, with a maximum of 18 months. Second, the maximum loan amount is $250,000. That may not be long enough or enough money for every small business on the hunt for funding.

So if you need a lengthier term or a higher lending limit, you would be wise to shop around before settling on Kabbage (or any other lender). Start by looking at some of Kabbage’s competitors or a comparison of our favorite lines of credit to find one that might suit your business needs better.

FAQs About Kabbage Funding (Line Of Credit)

The Merchant Maverick Seal of Approval 🏆

Kabbage Loans	Apply Now

After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Kabbage Loans for yourself.

The Merchant Maverick Seal of Approval 🏆

Kabbage Loans	Apply Now

After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Kabbage Loans for yourself.

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