Kabbage Funding: Amex +3 Small Business Alternatives [2023]

If you’re a small business owner in need of some quick cash, you may have come across Kabbage Funding. Or, if you’re like me, you have received countless Kabbage invitations in the mail.

You may even be exploring starting a business of your own. After all, this past year has taught us that it’s never too late to pivot and take a shot at being your own boss.

In fact, 63% of small business owners are over 40 years old.

However, the next generation of entrepreneurs is getting in on the business game too.

Millennials and GenZs are 188% more likely to start their own business.

But every business owner will, at some point, need to make an important decision: how to finance and manage cash flow for their business.

This article will break down Kabbage Funding by American Express and three alternative small business financing and banking options.

Kabbage leads the pack of a new breed of online lending platforms helping small businesses secure quick loans at convenient terms. Small business owners who cannot fulfill the requirements of traditional lenders can easily access a line of credit on Kabbage. 

With Kabbage, businesses can enjoy ample funding flexibility, raising funds whenever the need arises. The loans range from $2,000 to $250,000 and can be used to fund e-commerce inventory, payroll, operational costs, or marketing and advertising campaigns.

What’s more, you can raise funds as often as you want without ever worrying about expenses like application or origination fees, maintenance fees, or payment penalties.

This guide is designed to help you determine if Kabbage is the right fit for your business funding needs. We’ll look at how the platform works, some of its important terms and conditions, and how to apply for a quick loan. 

Kabbage also has some drawbacks, which some competitors are vying to capitalize on. If you have some reservations about Kabbage, we’ll also be looking into the offerings of some of the most popular competitors in the space. 

Kabbage from American Express

Overview

Kabbage is a small-business banking subsidiary of American Express Co. It was founded in 2008 as a small business bank and then upgraded to a lending platform two years later in 2011. 

Today, fair-credit borrowers can secure access to cash of up to $250,000 on the platform. As a fair credit loan facility, you can qualify with a credit score as low as 640, which falls in the fair range of FICO scores.

While the platform sets aside most requirements of traditional lenders, it does require a personal guarantee. Business owners must take personal responsibility for their business loans.

Let’s take a closer look at some of Kabbage’s most notable offerings

Key Features 

The platform’s paramount feature is its business line of credit. With this offering, businesses are allowed to serve only the amount drawn down from the loan balance, not the entire loan. As such, they’re spared the expenses of loans that sit idle while also enjoying seamless access to more funds as the need arises.

The platform’s line of credit comes in different forms and can be used for a variety of purposes, including:

• Commercial loans
• Short-term business loans
• Working capital
• Merchant cash loans
• Equipment loans
• Factory loans
• Industry-specific loans

How Do Kabbage Funding Loans Work?

To get a loan on the platform, you must have an active business checking account on Kabbage or American Express and an active card issued by American Express that’s at least 6 months old. 

You might still qualify if you don’t have all of this, but the preapproval process might take a toll on your credit score. 

Before applying, make sure to check whether their pre-approval will affect your credit score. Kabbage Funds will verify your business information using consumer and commercial reports obtained from various agencies, but their methods could have an impact on your score. 

Also, you need a credit score of at least 640, an annual revenue of at least $50,000, and you must be in business for at least a year. 

Once your details have been verified and you qualify, the rest is easy. Just sign on the dotted lines of the loan agreement, and your account will be credited, and your loan ready to draw down within days. 

Loans are usually approved and posted to the loanee’s designated account within three business days of signing the loan agreement.

Loan Terms and Conditions

Here are some of the most notable terms in Kabbage Funds’ loans terms:

• Loan fees and loan term range: 
• 2% – 9% for 6-month loans; 4.5% – 18% for 12-month loans; and 6.75% – 27% for 18-month loans.
• Outstanding balances and late payments may apply under certain circumstances.
• A personal guarantee for all loan
• Separate terms for both the full loan and the installment loan
• Monthly repayment schedules

Types of Businesses Best for Kabbage Loans

Fair-credit borrowers

Perhaps the group of borrowers who’ll appreciate Kabbage Funds the most is fair credit borrowers. Kabbage Funds’ minimum credit score requirement is 640, well below those of traditional lenders.

Business owners in need of flexible financing:

Kabbage loans offer flexibility in many areas. First, you can choose loan term lengths in multiples of 6-month terms, – 6 months, 12 months, or 18 months. You’re also allowed to take out more than one type of loan per time in your line of credit. 

New businesses:

Startups and new ventures can assess quick, flexible, low-cost loans to cover their operational costs until they break even.

Borrowers in need of same-day loans:

Kabbage funds can come in handy anytime you need a quick loan, whether to clear a long-standing debt or to solve an urgent issue with your online business. From start to finish, you can apply for a loan and get it in just a couple of days.

How to Apply for a Loan on Kabbage 

You can apply for Kabbage funding within just a few minutes. First, you need to check to see if you’re eligible for the type of loan you want and also if the preapproval process will have any impact on your credit score.

Once you have that sorted, follow these steps to apply for your loan:

1) Set up your account either through their website or mobile app. If you already have an American Express account, simply log in using your Amex credentials. 

2) Fill out the form on the application window – you’ll need details like your business name and contact details, business tax ID, social security number, etc.  

3) Wait for Kabbage to verify your information. If everything checks out well, your details could be verified within minutes. 

4) If your application is approved, you’ll be sent a loan agreement. This will contain the final details like the loan amount, the repayment terms, and the loan duration. 

Once you sign on this, your loan bank account will be credited within 3 business days.

To help you determine whether Kabbage is the best place to source your business loans and banking, let’s take a look at what some of its closest rivals have to offer.

2) BlueVine

BlueVine gives Kabbage a good run for its money with slightly lower rates, faster loan disbursement (most loans are issued the same day), and a lower credit score requirement of 600 (sometimes as low as 500).

BlueVine also offers a fighting chance to much younger businesses.

Six-month-old businesses may be eligible for loans that range from $2,000 to $250,000.

Like Kabbage, BlueVine borrowers can draw down their loans whenever without worrying about extra fees like total monthly fees incurred, maintenance fees, origination fees, prepayment penalties, penalties for an outstanding balance, and other general fees. 

BlueVine customers can also access an interest-bearing business checking account with reserve accounts for asset separation on the platform.

Besides the significantly higher borrowing limit, BlueVine also edges Kabbage in areas like annual percentage yield (APY) and a richer software ecosystem, making it more attractive to business owners.

Another area where BlueVine shines through is transparency. For one, you can hardly find anyone to talk to on Kabbage – customer care conversations begin and end with chatbots. 

They’re also not clear on many critical issues like their minimum credit score requirement and other loan requirements. 

BlueVine not only has responsive customer care that’s manned by humans, but they’re also very upfront – just about everything you’d need to know is already up on their website.

BlueVine Vs Kabbage: Head-to-Head Comparison

Loan terms and conditions	Kabbage	BlueVine
Type of Financing	Line of credit	Line of credit
Minimum annual revenue	$50,000	$120,000
Opening deposit and minimum balance	None	None
APY	2.0% on balances of up to $100,000 for eligible	1.1% on balances of up to $100,000
Teller cash withdrawal fees	None	$3 per transaction
Software integrations	Only payment integrations like PayPal and Stripe	Both payment integrations and accounting software like QuickBooks and Xero
Customer support	A dedicated team of professionals is available around the clock by phone and email	Mostly email

Data source: Fit Small Business

FAQs

Does Kabbage offer a good checking account?

Kabbage funding offers a handy checking account that’s accessible through an intuitive mobile interface. Their checking account comes with enticing features like zero monthly fees, no fees for ACH and international wires, plus support for an unlimited number of transactions and a competitive APY of 1.1%. 

Do Kabbage loans require collateral?

The only form of guarantee that Kabbage requires is a personal guarantee from the business owner to pay back the loan. There’s no need for any personal collateral or business collateral, and this significantly eases and speeds up the loan approval process. 

What is the minimum credit score required by SBA?

SBA loans are directly geared toward small businesses, and SBA uses FICO Small Business Scoring Service (SBSS) rather than a personal credit score to check the financial health of borrowers.

This is a different score based on the business owner’s credit bureau score as well as other financials. It ranges from 0 to 300, and businesses must score at least 155 to qualify for an SBA loan. 

Where do online lending platforms operate?

Platforms like Kabbage Funding, BlueVine, and Novo are available across all 50 states and all U.S. territories. OnDeck is available in all states except Nevada, North Dakota, and South Dakota.

Final Thoughts: No Shortfall of Quick Funding Options for your Small Business

As a business owner, extra funds can always come in handy now and then, whether you’re experiencing payment delays from customers, struggling with cash flow problems due to off-seasons, or looking to expand to other locations.

With Kabbage and the other top-notch loaning platforms in this guide, you’re always a heartbeat away from securing the extra cash you need to move forward with your business. 

The lenders in this review share quite a lot in common – a fast application process, low rates, and flexible terms. But the slight differences between their offers can mean a lot for your business, so do your due diligence when considering your options.

Once you’re settled on an option, you can start out with a smaller loan to see how the process works. If it’s favorable enough, you can then go in for more. 

Now, there’s one less excuse to get the funding your business needs today!