Are you a small business? Do you need quick cash? Do you have a great opportunity to cash in on some cheap bulk inventory? Do you need to fix broken equipment in a timely manner in order to avoid profit loss? Do you have any other sort of short term expenses that you need to take care of?  Kabbage may be exactly what you need.

Kabbage was founded in 2009.  The company approves lines of credit for small-business owners based more on their banking, e-commerce, and accounting data than on their credit scores.  Kabbage’s online application takes only minutes to complete, and borrowers can be approved in that same amount of time.  Or it can take a few days at most.  Sound too good to be true? Because it is.  Kabbage loans are some of the most expensive small-business loans on the market.

Who Are Best Suited for a Kabbage Loan?

  • Business owners with bad credit
  • Businesses that need fast working capital

Qualifying Factors:

  • Business needs an annual revenue of at least $60,000
  • Business needs to have been running for at least one year
  • Business needs a checking or PayPal account

Reasons to Use Kabbage

Kabbage is a good option for business owners who need cash immediately and don’t mind paying higher rates for the privilege of speed.  The application doesn’t require paperwork – all you’ll need to do is link Kabbage to your business checking or PayPal account.  You can also provide access to additional accounts, such as Xero, Etsy, Amazon, eBay, Square or QuickBooks.  Kabbage can use all this as extra information when evaluating your application.

If speed isn’t an absolute necessity, there are still reasons for small businesses to seek funding from Kabbage.  Kabbage approves business owners that basically can’t seem to get approved anywhere else.  They have a unique way of analyzing a business’s financial situation and determining if they are eligible for a loan.  While credit score still plays a part, it is not weighed as heavily with Kabbage as it is elsewhere.  Kabbage mainly looks at the data from the accounts you link, your average monthly revenue and the number of years you’ve been in business in order to make an initial lending decision, determine your credit limit and set your fees.

The Downside of Kabbage

The first thing you will notice that you do not like about Kabbage is their fee structure.  Kabbage’s fee structure is complicated.  Each month you will pay back a percentage of the amount you borrow, plus a fee.  For the first two months, you’ll pay a fee of 1% to 12% of the total amount you borrowed.  The way the determine what your exact fee percentage will be is by analyzing the data from the accounts you’ve linked as well as your revenue, time in business and credit score.  For the remaining four months, you’ll pay 1% of the total amount borrowed.

For example: You borrow $5,000.  Kabbage sets your fee for the first two months at 5% of the total loan amount.  You’ll be paying $833.34 in principle, plus an additional $250 and $50 during the remaining four months.

Another thing about the fee structure, it gives you little incentive to repay your loan early.  This is because you pay most of your Kabbage fees within the first two months.  Making your savings much more miniscule for paying back within 4 or 5 months rather than 6 months.

Finally, the high rates of Kabbage makes it an unsavory destination for most business owners unless they really are in need of fast working capital and can’t get it anywhere else because of their poor financial history.  Kabbage’s annual percentage rate or APR ranges from 20% to 113%, making it one of the more expensive small-business loans on the market.


The bottom line is, Kabbage is there for those who have limited options.  The thing most people don’t know is, they don’t need to go directly to a lender like Kabbage.   By choosing to go to a marketplace instead, you will be presented with variety and more than likely given options to choose from.  A marketplace is a sort of intermediary where specialists very much like brokers will take a look at your financial situation and determine which direct lenders are more likely to approve you.  They can help you determine which products are best for your specific type of business and need, and they will help you structure your payout structure and length of term.  Marketplaces such as allow you to fill out one easy application and then get responses from all direct lenders rather than just one.  That way, we can choose the best deal for you while helping you avoid any application denials, crippling interest rates, or hits to your credit.

Working With Sprout

Sprout is an online marketplace where businesses come to compare and save on small business loans. You go to and simply fill out a profile or call us at 800-865-6057. Based on that information you provided, Sprout suggests the best matches depending on the amount and purpose of the business loan you are seeking. Last year, Sprout and it’s staff was responsible for over $100 million in loan approvals.

To speak with a funding specialist now, call: