Kabbage Review

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Kabbage works like any other lending institution, except it doesn’t really give out loans. Instead, it approves your business for lines of credit you can then borrow against. You can open lines of credit between $2,000-$250,000 and take out installment loans with repayment terms of six, 12, or 18 months. Kabbage has a minimum credit score requirement of 640, so its APRs start lower than most small business lenders. While Kabbage is a good option for small business owners with fair credit, it also has a complicated fee structure and above-average costs, which make it a less viable option than many of its competitors.

Kabbage logo for Crazy Egg Kabbage review

Kabbage Compared to the Best Small Business Loans

When evaluating small business loans, choose an option that matches your financial situation, offers good interest rates, and your desired repayment time frame. Kabbage may not necessarily tick all these boxes, so here are a few other recommendations for the best small business loans:

Lendio is our top recommendation for small business loans because it matches you with 75+ different lenders and assists with a diverse range of loans. Complete the short application form to get started.

OnDeck is the perfect business credit solution for business owners looking to secure same-day funding. Apply now to see the credit options that work best for your use case.

Bluevine is the easiest way to get a low-interest, quick cash injection for your B2B business. Get started today to evaluate the open lines of credit with no maintenance fees and instant approvals.

Kabbage: The Good and The Bad

Kabbage was acquired by American Express in 2020 and has since created a name for its streamlined application process in which borrowers can get a decision in just minutes after connecting their business checking accounts. But is it still the right option for you based on its drawbacks? Let’s find out.

What Kabbage is Good At

Kabbage is definitely a good choice if you want to secure funds quickly and conveniently. Thanks to it, you can have funds deposited into your account in just three business days. Other desirable features include a quick and lenient application and loan approval process, full transparency at all levels, and several repayment options to suit your schedule.

Lenient application process: Contrary to alternative lenders who have a lengthy application and subscription process, you can apply for a line of credit and get approved almost immediately online through Kabbage. All you have to do is provide basic information about a business, such as your company’s name and address, type of industry, corporate structure, and the set month and year. 

If you don’t want to send your financial statements, link your application to your company’s checking account or another online service like PayPal or QuickBooks. Kabbage will automatically go through the data on these websites to determine whether you qualify its standards for loan approval.

Quick loan approval: Kabbage performs a hard pull on your credit in the application stage to evaluate your credit history, verify your identity, and determine risk. You’re likely to get approval if you have a minimum score of 640, but the platform uses a proprietary algorithm to determine rates and fees and gauge whether to approve or decline your application. 

Generally, the whole process takes just a few minutes, but it can take up to 4-7 business days if Kabbage has trouble verifying information. Once approved, you can start drawing funds to your chosen (verified) bank account within three days. Note you don’t need to pay any fees until you draw funds, and your repayment amount will depend on your outstanding balance.

Fully transparent sales and advertising: Financial matters are a sensitive subject, so it’s great to see Kabbage fully disclosing all numbers, application procedures, fees, and terms of service on its website. There’s a loan calculator to help you understand the admittedly complicated fee structure, as well as a help center filled with knowledgeable articles to help you understand the different services Kabbage offers. 

What’s more, Kabbage gives you your loan details in a SMART box, a standardized method of disclosing financial information that helps you easily compare offers from different lenders. This box includes the total cost of capital, the APR, the average monthly payment, and the cents-on-the-dollar cost. This significantly simplifies the evaluation process, helping you choose a loan that works best for your budget.

Multiple repayment schedules: Kabbage charges interest rates depending on the length of time: 2-9% for a six-month loan, 4.5-18% for a 12-month loan, and 6.75-27% for an 18-month loan. Each month, you’ll or an equal amount of the principal you borrowed, plus a monthly fee.

For six- and 12-month terms, you have to pay a fee each month you have a balance. For an 18-month term, fees are accrued at the start, and you must pay an equal portion of the fee and principal every month. Moreover, each repayment requires a minimum withdrawal amount: $500 for six months, $10,000 for 12 months, and $15,000 for 18 months. 

Note: Kabbage allows early payoff and changes rates for the six- and 12-month schedule. For the six-month term, you’ll pay the full fee rate as applicable for the first two months, and then the fee rate will drop to 1.25% for the remaining four months. For a 12-month term, you’ll pay the full fee rate for the first six months and then 1.25% of the remaining six.

Well-rounded customer service and technical support: Kabbage offers users several self-help options in addition to common contact methods. If you need help with your Kabbage account, contact the team via phone, email, or social media. This is in addition to the easily navigable Kabbage help center and YouTube channel where you can find answers to common questions and watch helpful videos and customer success stories respectively.

What Kabbage is Bad At

People generally opt for Kabbage because they can’t qualify elsewhere and need money right away. But its small business loans are exorbitant, to say the least. We recommend exploring other lenders that have better offers. Additionally, Kabbage doesn’t offer any incentive to repay your loan early, and the fact that it pulls a hard credit check can also affect your credit score.

Significant costs: Kabbage‘s charges reflect the price you pay for their requirements and the streamlined funding process. But if you explore other online business lending options, you’ll know that this convenience and accessibility come at a very high price and APR.

It’s also important to note that Kabbage doesn’t report to personal or business credit bureaus. If you have poor credit, you should choose a lender that reports your payments to build credit. With these lenders, paying just a few months’ worth of repayment will significantly help improve your personal and business credit score.

Application requires a valid business checking account and hard inquiry: Before deeming you eligible for a loan, Kabbage will review your bank accounts, prior credit, and repayment history. It analyzes your business’s average monthly revenue and transaction volume, among other usual metrics. It’s for these reasons Kabbage makes it mandatory for borrowers to have a valid business checking account.

You must also consent to a one-time hard inquiry. This will allow Kabbage to review the information within your report when considering approval, with applicants in fair to excellent categories being more likely to qualify. The problem here is this can reflect on your credit score, which can be a problem for those with fair to poor credit.

Average customer reviews: Kabbage has a meager 3.2-star rating on Trustpilot, which considering there are about 6,500+ reviews is quite poor compared to other online banks (for reference, Lendio has over 20,000 reviews and still scores 4.8 stars). From slow customer service to failing to honor promotional bonus offers to broken tools, Kabbage clearly needs to buck up to make a positive impression on users.

A few reviews also pointed out that Kabbage froze accounts, restricting their access to their money, which is a major concern for us. 

Online banking only: Kabbage only offers online and mobile banking, which isn’t a disadvantage as such. But if you prefer in-person meetings or want to visit a physical branch to deposit huge sums of money, the online-only service may seem inconvenient to you. Ensure you’re comfortable with this before committing to Kabbage.

Limited product offering: Kabbage doesn’t offer several banking products you can easily get elsewhere. For instance, it doesn’t have business savings accounts, merchant services, or any other banking services you would find when using a traditional bank. Multiple checking account options aren’t on offer as well.

Again, this may not be much of a bother if you don’t require additional services. But if your needs were to change down the line, Kabbage won’t be able to accommodate them.

Kabbage Options and Pricing

Kabbage helps borrowers looking to get quick access to money, as well as those having difficulty getting approval to open a line of credit. The financial products and services on offer include flexible funding, payment processing, and cash flow insights.

Kabbage Funding

Screenshot of Kabbage Funding webpage that features its quick application, flexible access, term length options, and straightforward fees

Kabbage funding is essentially Kabbage’s business lines of credit, which is a decent but pricey option. While it’s an overall good service, you’ll undoubtedly find more viable options from other lending institutions and marketplaces.

Here are the minimum criteria to get your application approved, including but not limited to:

  • Being at least 18 years old
  • Starting the business at least a year ago
  • Having a FICO score of at least 640 at the time of application
  • Having an average monthly revenue of at least $3,000

To apply for Kabbage funding business line of credit online, you’ll have to connect your business accounts, after which the company will look at your financial information in real-time and give you a decision. If you’re approved, you’ll have flexible access, where you use only the funds you need and when you need them. No premiums and penalties to worry about.

In addition, Kabbage offers six-, 12-, and 18-month loan term options with flexible monthly rates. You only have to pay fees on the amount you use during the months you have an outstanding balance. 

Kabbage Payments

Screenshot of Kabbage Payments from American Express webpage

Kabbage lets you accept card payments online with a low, flat fee of 2.25% per transaction. Customers can use all major cards, including American Express, Visa, MasterCard, and Discover, to pay you fast and securely. But this service isn’t a replacement for traditional merchant service.

You can accept online payments through your business’s custom links. Here’s how this works — you create a unique URL pay link for your business to accept card payments online and then share it with your customers to make the payment.

The other option is to create customized invoices and email them directly to your customers.

It’s why Kabbage Payments is better for B2B businesses that invoice customers instead of, say, retail businesses. 

Kabbage Business Checking

Screenshot of Kabbage Business Checking webpage that features its rewards and benefits

At its core, Kabbage Business Checking works as a traditional checking account, where you get the traditional features and capabilities—but with certain extra benefits.

While you have a fully digital account to manage your business accounts on your time, Kabbage won’t attach any monthly fee to the account. There’s also no deposit requirement, and you can open up an account and begin banking at any stage. 

For every business you sign up with Kabbage, you’ll have the option to open up to five wallets. Use these to track your business savings and manage cash flow. You can also set up vendors, issue digital payments, and organize bills from other accounts.

Note: Kabbage Business Checking isn’t accepting applications at this point. We’ve included this section since the service hasn’t been discontinued, and the restriction may be lifted in the future.

Kabbage Insights

Screenshot of Kabbage webpage that explains cash flow management at a glance

Link your business accounts to the Kabbage platform to get valuable insights and better manage your business cash flow. 

Cash flow analytics includes easy-to-read charts and graphs that give you a quick picture of the business finances and balance forecasts that will help you track your cash flow and keep your business moving forward. Customized data is also useful for anticipating cash flow ups and downs.

With Kabbage Insights, you can manage your cash flow confidently. You’ll have quick, 24/7 access to your data through your link accounts, allowing you to anticipate patterns and plan for cash flow gaps.

Kabbage in Summary

Kabbage is a trustworthy banking business solution for borrowers who have been running a business for at least one year with fair or poor credit ratings. It has a fully transparent application and loan approval process and well-rounded customer service to assist you in your small business loan journey. 

But keeping in mind Kabbage’s significantly high fees and APRs, average customer reviews, and online-only support, it might be better to look for other small business loan providers to find a better fit. Don’t forget about our Golden Eggs! Lendio has a great range of both loans and lenders. OnDeck can get you funding the same day you apply for it. And Bluevine is a great choice for low-interest B2B loans. Check out our review of the best small business loans to see what is right for you.

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