Giving the Best Alternative Loans to the Credit Line

Kabbage’s automatic online approval process and easy repayment terms set it apart from many of its competitors. Here is a breakdown of why Kabbage is our best pick.

While some alternative lenders have you go through a lengthy application and underwriting process, application and approval for Kabbage is completed almost instantly, and totally online.

To get started, you provide some basic information about your business, including the following:

  • Business name and address
  • Company structure
  • Industry type
  • Month and year established

Instead of sending in financial statements, such as tax returns and debt structures, you link your application to a business checking account or other online service that you use, such as QuickBooks or PayPal. Kabbage’s platform automatically and instantly reviews the data on those sites to determine if you meet Kabbage standards for a loan. The company looks at this information to determine your average monthly revenue, time in business and transaction volume, among other things. 

The banks and online services you can connect with are Chase, Bank of America, Wells Fargo, PNC, U.S. Bank, Regions, BB&T, TD Bank, USAA, Citibank, Capital One, SunTrust, Navy Federal, BBVA Compass, PayPal, Authorize.Net, Stripe, Sage, Square, eBay, Shopify, Amazon, Etsy, Intuit QuickBooks and Xero.

As part of the approval process, Kabbage allows you to link your application to your bank account or a business service you already use. Kabbage’s platform automatically reviews the data to determine your eligibility.

After conducting a quick analysis of your data, which also includes a personal credit check, Kabbage quickly lets you know if you’ve been approved for a line of credit and, if so, for how much. The process typically takes only several minutes to complete. Once approved, you can receive the loan instantly. You can also link additional services to your account to potentially increase your line of credit.

Since every business has a different financial makeup, it’s impossible for us to say exactly what it will take to be approved for a line of credit with Kabbage. Your financials, such as monthly revenue, transaction volume and credit score, play a large role in not only whether you get a loan, but also for how much.

However, in order to even be considered, there are two minimum requirements you need to meet. You must …

  • Have been in business for at least 12 months.
  • Have a minimum of $50,000 in annual revenue or $4,200 per month over the last three months.

What separates Kabbage from many other online lenders is the minimum amount of revenue the company requires before it will consider you. For many of the other lenders we looked into, the minimum revenue requirements were at least double what Kabbage requires.

Kabbage also looks at your credit score when deciding whether to give you a loan and determining the term rate you will receive. The representatives we spoke to said they typically look for credit scores of at least 600. However, there have been instances when they have approved borrowers with credit scores as low as 550.

A Kabbage line of credit works more like a credit card than a traditional loan: You use only what you need and pay fees on only how much you actually use. For example, if you’re given a $20,000 line of credit but only use $10,000, you pay fees only on the $10,000. With Kabbage, you can draw money against your line as often as once per day.

The company offers lines of credit up to $150,000. Each draw against your line of credit is considered a separate loan. Each time you take out one of those loans, you have six or 12 months to pay it off. A minimum loan of $10,000 is required for a 12-month loan term.

With Kabbage, you pay a set monthly fee each month, plus an interest fee. If you have a six-month loan, you pay one-sixth of the loan back each month, plus interest fees that can range from 1.5 to 10 percent.

Other than the monthly fees, there are no added costs for a Kabbage line of credit. Nearly all of the other lenders we considered charge at least an additional origination fee.

To make the payment process easier, Kabbage combines all of your payments into one due date each month. Additionally, there are no early payment penalties, which some of the other lenders we considered charge.

Kabbage does not impose any limitations on what you can use your line of credit for. How you use the money is totally at your discretion.

To manage their line of credit, borrowers can use a mobile app. With the app, you can draw money from your line of credit, make loan payments and view your transaction history.

We were pleased with the level of customer service we received from Kabbage. To test the type of support you can expect, we called the lender numerous times, posing as a business owner interested in a line of credit.

Each time we contacted the lender, helpful representatives were immediately available to answer all of our questions. Rather than grilling us on what type of business we had or how much money we needed – which many of the other lenders we called did – the Kabbage representatives made sure all of our questions were answered first.

The support agents we spoke to thoroughly answered all of our questions about the lines of credit, how the repayment process works and who qualifies. By the end of our calls, we had a clear understanding of how the Kabbage loans work.

We were also impressed with Kabbage’s online help center. It features the most extensive FAQs section of nearly all the lenders we investigated, answering questions on payments, fees, loans, applying and security.

Kabbage offers an extensive help center with valuable FAQs and videos that explain the entire lending, application, approval and repayment processes.

You can contact the Kabbage customer support team via phone, email and a form on the company’s website.

One downside of Kabbage is the short time you have to pay back your loans. While the company recently started offering a 12-month repayment term, not all borrowers qualify for that option. Those who don’t have only six months to pay back their loans. If you are looking for longer loan terms, consider our best alternative lender for working capital loans, Fundation.

We also found a number of complaints about Kabbage that were filed with the Better Business Bureau. According to the BBB website, as of August 2017, there were 42 complaints filed against Kabbage over the past three years. Of those, only six were resolved to the satisfaction of the complainants. Although Kabbage addressed the other 36 issues, either the consumer did not accept the response or the BBB has not heard back from the consumer as to their satisfaction.