Growing Your Business With… Kabbage?

Have you been meaning to expand a real estate business but don’t have access to capital?

Any business owner knows that finding capital to start a business can be tedious. If you’re a real estate professional, you’d know how exhausting it is to find feasible banking options.

Finding the right bank or lending option can take more time than you think. Depending on your financial need, current financial state and your financial history, it might take months before you can get your hands on your capital.

And you know what they say, (whoever ‘they’ is): “Time is money.”

One company understands that businesses can’t afford to spend most of their time waiting and waiting. Since time is money, this company made it possible for people to get money for capital in less than an hour.

Kabbagefor Your Business

Kabbage is in the business of providing ‘working capital for small businesses.’

They promise to provide you with the cash you need to start your business quickly, conveniently and securely.

The process of applying for a loan is completely done online – in under 10 minutes. Talk about fast and easy transactions.

They offer lines of credit that can range from $2,000 to $250,000 and it requires repayments in six to 12 months. Plenty of time to flip a house if that is your niche.

Speed: One of Kabbage’s best features is that the whole application process happens online – no documents needed – in under 10 minutes. You’ll be able to know whether you’re going to get the loan on the spot – no wasted time!

And, you’ll be able to get your loan immediately or within a few days, depending on how you receive your money and how long Kabbage takes to verify your bank account and business data.

To access the funds faster, it’s better to do a direct transfer to your bank account through debit card or an instant transfer to your PayPal account, compared to an automatic bank deposit.

face Minimum Qualifications: They don’t require a minimum personal credit score but the lender checks it, and most of their borrowers have a credit score of at least 500.

You need to be in business for at least a year with an annual revenue of no less than $50,000. You also need to open a business checking account or online payment platform, such as QuickBooks or PayPal.

Costs: Kabbage’s credit lines have a monthly fee instead of a regular interest rate. The loans are to be paid within 6 months to a year. You pay a principal amount every month plus an additional percentage fee of the total amount of loan.

In the 6-month plan, the fees are higher for the first 2 months – and can range up to 10%. Then it decreases to 1% in the succeeding 4 months. Same goes for the 12-month plan where the fee is higher during the first 6 months, then falls to 1% for the succeeding 6 months.

Check out their loan calculator page to understand exactly what you’d be paying each month for the term of the loan.

You don’t need to pay early payment fees. And if you pay early, you get to save on fees.

But, your savings will only be minimal since you already paid for most of the fees in the first 2 months during a 6-month plan. It makes more sense to pay early during a 12-month plan if you plan on paying within the first 6 months.

Pros: Why Use Kabbage

Here are some of the reasons why people use Kabbage:

1. Access to Cash Fast

If you need your money ASAP and you don’t mind paying a more expensive rate for fast transactions, then Kabbage is the one for you. Think fast closings. You don’t need paperwork. All you have to do is to fill an online form and connect a book keeping software, business checking account or payment platform.

2. Hope for Business Owners with Bad Credit

One of the dilemmas in applying for a loan is that some business owners could not get approved for a cheaper loan. But most Kabbage borrowers have personal credit scores of 500, at the very least.

When borrowing from Kabbage, they focus on the data from the accounts you linked, the number of years you are in business and the average monthly revenue.

Cons: Where Kabbage Needs to Improve

Here are some of the downsides of Kabbage:

1. High Rates

Converting the fees into an interest rate may scare you. It’s all part of the calculation on whether you can make a deal work. ‘Quick cash’ scenarios almost always come with higher interest rates.

2. Fee Structure

Kabbage’s fee structure is quite complicated. You’d have to pay a principal amount each month for an additional fee.

For their 6-month plan, you’d have to pay 10% of the total amount for 2 months, and then 1% for the next four months. And the same goes for the 12-month period where you pay 10% in the first 6 months, and then 1% for the succeeding months.

3. Not ManyB enefits for Early Payers

Since you pay most of the principal amount in the first few months of your loan, there isn’t really much benefit when you pay your loan early even though there aren’t any prepayment penalty fees.

So…

If you think Kabbage doesn’t work for you, don’t lose hope since there are dozens of other alternative lending options for you, such as Lending Club and OnDeck. It really helps to do your research but, overall, Kabbage can be a great lending option for small businesses.