Published By Janet Gershen-Siegel at August 18th, 2020
Kabbage is one of several lending companies online. It provides small business funding in the form of loans and lines of credit. We look at the specifics and drill down into the details about the online lending option.
Kabbage is located online here: https://www.kabbage.com/. Their physical address is:
925B Peachtree Street NE
Atlanta, GA 30309.
You can call them here: (888) 986-8263. Or you can email them at: [email protected]. Their contact page is here: https://www.kabbage.com/support/contact/. They have been in business since 2009, which is longer than most of the players in this space.
Kabbage is one of several lending companies online. It provides small business funding in the form of a line of credit.
Kabbage is a venture funded company. They are backed by investors which include SoftBank Capital, Thomvest Ventures, Reverence Capital Partners, Mohr Davidow Ventures, the UPS Strategic Enterprise Fund, ING, BlueRun Ventures, Santander InnoVentures, Scotiabank, and TCW/Craton.
The company offers perks for its customers. These include specials from Dun & Bradstreet, UPS, Vonage, and Adobe Creative Cloud. See: https://www.kabbage.com/customer-perks/.
First, they offer lines of credit. This means it is revolving credit you can use as needed. For most, amounts of up to $150,000 are available. You can qualify in as little as 10 minutes. Furthermore, terms are 6, 12, or 18 months. You have to be in business for more than one year, and your business revenue has to be $50,000 annually. You’ll also need a business bank account.
In the course of this Kabbage review, I found the minimum FICO score they will accept is 640. Whatever the case, it appears that their minimum required credit score is much lower than others in the field. I couldn’t tell if they report on-time payments to the credit agencies, but they may report late or missed payments.
One thing I could find from Kabbage themselves is that they do a one-time hard credit pull. A hard credit check will affect your credit score. Also I found this information in the FAQs on the Kabbage website. It wasn’t just out there on a top page.
Kabbage links to your bank or merchant accounts to understand your cash flow and decide what amount you can afford to borrow. Their lines of credit range up to $150,000.
If they are able to automatically get business information and verify your bank account, they can approve a loan in minutes. Also, they may send small deposits to help confirm your banking information for security purposes. In these cases, it may take longer to get access to funds.
Once everything is settled, they send funds to the account of your choice. If you choose to have your funds deposited to a PayPal account, it takes just a few minutes. However, loans that go to a business checking account can take up to three days to be deposited. It just depends on your bank.
They retain access to your account. This means they can review your revenue faster than other lenders. Still, it also means they have access to your account for the duration and beyond unless you take action.
If you make a draw using the dashboard or app, you have to take a minimum of $500. In contrast, if you use your Kabbage card there is no minimum draw.
Advantages include fairly low fees. Kabbage perks are a nice touch not found with other online lenders.
Disadvantages include how hard it is to find the actual, correct requirements to qualify for their loans.
This is credit in a small business’s name. It doesn’t link to an entrepreneur’s consumer credit, not even if the owner is a sole proprietor and the only employee of the small business.
Thus, an entrepreneur’s business and consumer credit scores can be very different.
Due to the fact that small business credit is separate from individual, it helps to secure a small business owner’s personal assets, in the event of litigation or business bankruptcy.
Also, with two separate credit scores, a business owner can get two different cards from the same vendor. This effectively doubles buying power.
Another benefit is that even start-ups can do this. Going to a bank for a business loan can be a recipe for disappointment. But building small business credit, when done correctly, is a plan for success.
Consumer credit scores depend upon payments but also additional factors like credit usage percentages.
But for small business credit, the scores actually merely hinge on if a company pays its bills timely.
Establishing business credit is a process, and it does not occur without effort. A business must proactively work to establish business credit.
Nonetheless, it can be done readily and quickly, and it is much quicker than establishing consumer credit scores.
Vendors are a big aspect of this process.
Doing the steps out of sequence will cause repetitive denials. No one can start at the top with company credit.
A small business must be Fundable to loan providers and merchants.
That’s why, a company will need a professional-looking website and email address. And it needs to have site hosting bought from a supplier such as GoDaddy.
In addition, business phone numbers should have a listing on ListYourself.net.
At the same time, the company phone number should be toll-free (800 exchange or comparable).
A business will also need a bank account devoted purely to it, and it must have every one of the licenses essential for running.
These licenses all must be in the accurate, appropriate name of the company. And they must have the same company address and telephone numbers.
So bear in mind, that this means not just state licenses, but potentially also city licenses.
Visit the Internal Revenue Service web site and get an EIN for the company. They’re free. Pick a business entity like corporation, LLC, etc.
A business can begin as a sole proprietor. But they should change to a variety of corporation or an LLC.
This is in order to limit risk. And it will make the most of tax benefits.
A business entity will matter when it involves taxes and liability in case of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and taxes. No one else is responsible.
Start at the D&B web site and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a small business into their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s web sites for the small business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.
In this way, Experian and Equifax will have activity to report on.
Know what is happening with your credit. Make certain it is being reported and take care of any inaccuracies ASAP. Get in the practice of checking credit reports. Dig into the particulars, not just the scores.
We can help you monitor business credit at Experian, Equifax, and D&B for 90% less.
Companies which will do best with this particular lender are already somewhat successful. Most businesses would be able to take advantage of the perks which Kabbage offers. However, smaller companies which are less successful would do well to look elsewhere. In particular, for a company looking for a lower end line of credit would more likely be better served getting a microloan.
So while you can probably get Kabbage business funding in a recession, there are other options out there.
And finally, as with every other lending program, whether online or offline, remember to read the fine print and do the math. Go over the details with a fine-toothed comb, and decide whether this option will be good for you and your company. In addition, consider alternative financing options that go beyond lending, including building business credit, in order to best decide how to get the money you need to help your business grow.