Kabbage Small-Business Loans: 2020 Review

Kabbage provides fast — though potentially expensive — business loans and is an option for business owners with bad personal credit.

Jackie ZimmermannApril 30, 2020

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Our Take

Kabbage - Line of credit
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on Kabbage's website

Est. APR

24.00 - 99.00%

Min. Credit Score

560

Pros & Cons

Pros

  • Financing up to $250,000 available within a few days.

  • Accepts low credit scores.

Cons

  • Rates are high compared to other online lenders.

  • Must have online checking or PayPal account to verify cash flow.

  • Fixed-fee structure means early repayment does not save interest.

Compare to Other Lenders

Kabbage - Line of credit
OnDeck - Line of credit
QuarterSpot - Online term loan
Est. APR

24.00 - 99.00%

Est. APR

13.99 - 63.00%

Est. APR

30.00 - 70.00%

Min. Credit Score

560

Min. Credit Score

600

Min. Credit Score

550

Full Review

LOOKING FOR CORONAVIRUS BENEFITS INFORMATION?

Alternative lender Kabbage offers fast access to working capital.

Kabbage is a good option 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 fast: 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.

Reasons to use Kabbage

Fast access to cash

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 simply connect a business checking account, bookkeeping software or payment platform such as PayPal. You also can give the company access to your other accounts, such as QuickBooks, Xero, Etsy, Amazon, eBay or Square.

Customers can also request a Kabbage Card for no additional fee. Every time you make a purchase with the card, you’ll pull directly from your line of credit. While it’s fast and convenient, make sure you spend carefully — each transaction has associated fees (see Fee Structure, below).

Available to business owners with bad credit

Kabbage is a good option for business owners who can’t get approved for a cheaper loan because of bad credit. To make an initial lending decision, determine your credit limit and set your fees, Kabbage primarily considers data from the accounts you link, your average monthly revenue and the number of years you’ve been in business.

Where Kabbage falls short

High rates

Kabbage’s annual percentage rates range from 24% to 99%, making its loans some of the most expensive on the market. Avoid using Kabbage to cover the costs of large equipment purchases or renovations; you’ll want to finance those with a long-term, lower-cost loan.

Fee structure

Kabbage’s fee structure is complicated. Each month, you pay back a percentage of the amount borrowed — the principal — plus a fee. For a six-month term, you’ll pay a fee of 1% to 10% of the total amount you borrowed for the first two months, then 1% for the remaining months. The structure is similar for a 12-month term: You’ll pay 1% to 10% for the first six months of your loan, then 1% each month after.

Little incentive to repay early

Because you pay the largest chunk of your fees to Kabbage within the first two or six months, you won’t benefit much from repaying your loan early, even though the lender doesn’t charge a prepayment penalty.

If you like Kabbage, you may also like OnDeck

Like Kabbage, online lender OnDeck offers fast access to financing and has an easy application process.

OnDeck offers a line of credit with lower APRs than Kabbage, but it has higher requirements for credit score and revenue. It also offers term loans, which are a good option for expansion.

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

Compare business loans

If you’d like to compare loan options, NerdWallet has a list of small-business loans that are best for business owners. All of our recommendations are based on the lender’s market scope and track record and on the needs of business owners, as well as rates and other factors, so you can make the right financing decision.

Frequently asked questions