Kabbage Small-Business Loans: 2022 Review

Kabbage business loans offer faster funding than banks, but the monthly fee structure can be confusing compared with other online lenders.
Jun 29, 2022

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Our Take

The bottom line:

Kabbage loans are a good option for business owners with fair credit who want quick access to working capital.

Kabbage - Line of credit
Min. credit score
640
Apply now

on Kabbage's website

Pros & Cons

Pros

  • Streamlined application process with minimal documentation required.
  • Financing up to $250,000 available within a few days.
  • Accepts borrowers with a minimum credit score of 640.
  • Monthly repayment schedule (as opposed to daily or weekly).
  • No prepayment penalties, account maintenance fees or draw fees.

Cons

  • Must have online checking or PayPal account to verify cash flow.
  • Personal guarantee required.
  • Complex monthly fee structure makes it difficult to compare costs to other lenders.
  • Can’t be used to build business credit.

Full Review

Kabbage is an online lending platform that offers small-business loans to borrowers with a 640 FICO score or higher. Acquired by American Express in 2020, Kabbage is known for its streamlined application process in which borrowers can connect their business checking accounts and, in most cases, receive a decision in just minutes.

Although you can sign up for Kabbage business checking, business owners are not required to use that account to qualify for financing.

How Much Do You Need?

with Fundera by NerdWallet

Kabbage is best for borrowers who:

  • Don’t have perfect personal credit: While underwriting your loan, Kabbage focuses on less traditional information like banking, accounting and e-commerce data. That makes it a good fit for business owners with rocky credit histories.

  • Need cash faster than conventional loans: With an online application that can be completed in minutes, you can be approved for a line of credit and funded within a few days, at most.

  • Prefer a short repayment period: Kabbage offers loans of up to $250,000 with repayment terms of six, 12 or 18 months.

Kabbage loan features

Kabbage offers business lines of credit from $2,000 to $250,000 with repayment terms of six, 12 or 18 months.

Loan amount

$2,000 to $250,000.

Monthly fees

Instead of traditional interest, Kabbage charges monthly fees depending on your loan's term:

  • Six-month term: 0.25% to 3.50%.

  • 12-month term: 0.25% to 2.75%.

  • 18-month term: 0.25% to 2.50%.

Additional fees

  • No application fee, account maintenance fee or origination fee.

  • No prepayment penalty.

  • Late payment and unsuccessful payment fees may apply based on the information in your loan agreement.

Terms

6, 12 or 18 months.

Repayment schedule

Monthly.

Funding speed

As soon as the same day. May take up to three business days for funds to process, depending on your bank.

Where Kabbage stands out

Faster access to cash compared to traditional lenders

Kabbage is a good option for business owners who need cash immediately and don’t mind paying higher rates for the speed. The application process doesn’t require paperwork. Instead, you connect a business checking account, bookkeeping software or payment solution (such as PayPal or Square) to the Kabbage platform and the company uses data from these accounts to evaluate your eligibility.

Available to startup businesses and business owners with fair credit

Although Kabbage may not be as startup-friendly as some competitors (who work with companies with only six months in business), borrowers with just 12 or more months in business can qualify for this line of credit. Startup business lines of credit can be used to manage cash flow gaps, cover short-term expenses or take advantage of unexpected opportunities.

Similarly, if you have fair credit — and can’t qualify for a bank small-business loan — Kabbage can be a good choice for access to working capital. Although Kabbage has a minimum credit score requirement of 640, the company primarily considers data from the accounts you link, your average monthly revenue and the number of years you’ve been in business to evaluate your application, determine your credit limit and set your fees.

No extra fees

Whereas some lenders may charge draw fees or account maintenance fees with their line of credit products, Kabbage does not charge any extraneous fees. With a Kabbage line of credit, you’ll pay a monthly fee (equivalent to interest) during the months you have an outstanding balance. Kabbage does not charge application fees, origination fees, annual fees, account maintenance fees, documentation fees or draw fees.

You also have the option to pay back your loan early; Kabbage does not charge any prepayment penalties.

Where Kabbage falls short

Complex fee structure

Kabbage charges a fee each month that you have an outstanding balance — instead of a more traditional interest rate. You’ll pay this fee in addition to your monthly loan principal payments.

The specific fee you receive will vary based on your loan term, as well as your creditworthiness and other factors. Here’s how the fee ranges break down based on term length:

  • Six-month term: 0.25% to 3.50%.

  • 12-month term: 0.25% to 2.75%.

  • 18-month term: 0.25% to 2.50%.

Let’s say, for example, you draw a $60,000 loan with a 2% fee to be repaid over a six-month term. Your repayment schedule would look like this:

Month

Repayment toward principal

Fee amount

Total monthly payment

1

$10,000.

$1,200.

$11,200.

2

$10,000.

$1,200.

$11,200.

3

$10,000.

$450.

$10,450.

4

$10,000.

$450.

$10,450.

5

$10,000.

$450.

$10,450.

6

$10,000.

$450.

$10,450.

Totals:

$60,000.

$4,200.

$64,200.

Each time you draw from your line of credit, Kabbage issues you a separate installment loan with its own loan agreement. You’ll then pay fees on each individual loan.

Kabbage's proprietary fee structure makes it difficult compare their costs to other lenders. You should always calculate these types of fees into an annual percentage rate to understand the total borrowing costs.

Use our calculator below to get a sense of the cost of a business line of credit. Enter a withdrawal amount, repayment term and monthly fee to estimate your total fee amount and total repayment amount.

Not suitable for all businesses

Kabbage offers small-business loans only in the form of lines of credit and doesn’t offer any other products, such as term loans or invoice financing. If you’d prefer a different type of business loan, you’ll have to consider other lenders.

Kabbage lines of credit are also available only in small amounts — up to $250,000 — with short terms of up to 18 months. Businesses that are looking for larger loan amounts or longer terms will want to explore alternative options.

Can’t build business credit

Kabbage does not report payment history to the commercial credit bureaus. To build business credit from timely payments, you’ll need to find an alternative product.

Building business credit can help you qualify for larger business loans with lower interest rates in the future.

Kabbage loan requirements

Kabbage’s minimum borrower eligibility requirements include:

  • Credit score: 640 or higher.

  • Time in business: One year or more.

  • Monthly revenue: $3,000 or more.

You must be able to link a bank account that shows business revenue to qualify for a Kabbage line of credit.

How to apply for a loan from Kabbage

You can apply for a Kabbage line of credit online. First, you’ll need to create and log in to your Kabbage account. Then, you will connect your business checking account and any additional accounts to the Kabbage platform.

Kabbage will also ask for basic information about you and your business including:

  • Your name, home address and phone number.

  • Your business name, address and phone number.

  • Your business industry.

  • Your business tax ID.

  • Your Social Security number.

Before you submit your application, Kabbage will ask you to consent to a hard pull on your credit.

If Kabbage can verify your information, you should receive a decision almost instantly. If your application needs further review, it may take four to seven business days for you to get a decision.

If you are approved for a Kabbage line of credit, you’ll receive a loan agreement that lays out your credit line amount, term length and monthly fees. Kabbage will also provide a comparable APR so that you have a sense of how much the line of credit will cost.

You will have to sign a personal guarantee as part of your loan agreement.

Keep in mind that when you draw on your credit line, Kabbage does have minimum withdrawal requirements based on your term length. For six-month terms, the minimum withdrawal amount is $500, for 12-month terms, the minimum is $10,000 and for 18-month terms, the minimum is $20,000.

Alternatives to Kabbage

OnDeck

Like Kabbage, online lender OnDeck has a streamlined application process. OnDeck offers business lines of credit of up to $100,000 and term loans of up to $250,000. OnDeck lines of credit require weekly repayments, whereas Kabbage’s repayments are monthly, but the company will accept a minimum credit score of 625. Interest rates on both products run high compared with Kabbage, however.

For more details on how they compare, read our Kabbage vs. OnDeck comparison review.

Bluevine

Bluevine offers a business line of credit up to $250,000. And similar to Kabbage and OnDeck, Bluevine can approve applications in just minutes. Interest rates on a Bluevine line of credit range from 15% to 78% APR with terms of six or 12 months. However, unlike OnDeck or Kabbage, Bluevine will accept businesses with six or more months in business.

Learn more about these products in our Bluevine small-business loans review.

Compare business loans

To see and compare loan options, check out NerdWallet's list of best small-business loans.

Our recommendations are based on the market scope and track record of lenders, the needs of business owners, and an analysis of rates and other factors so that you can make the right financing decision.

Apply now

on Kabbage's website

Frequently asked questions