Kabbage.com: An Online Retailer's Best Friend

Linda Jenkins, August 18 2015


Kabbage logoKabbage is an Internet finance company that caters to an under-served market: online merchants. Kabbage's unique target demographic mainly includes merchants that sell on Amazon, Yahoo, Etsy and eBay. For example, merchants that sell soaps on Amazon, kayaks on Yahoo, handmade quilts on Etsy, or handbags on eBay could all expect to receive funding from Kabbage. Merchants can use the money to purchase additional products or materials, to hire help for shipping and packaging, to maintain cash flow, or for many other specified purposes.

Kabbage believes that online merchants are under-served by other financial services firms, and so its business focuses on advancing cash to online businesses. As of 2015, the company has expanded the number of online services you can use to qualify (ie., adding PayPal, Xero, QuickBooks, Stripe and more), and approves lines up to $100,000. However, it only provides advances for businesses based in the United States.

Technically, Kabbage is not a bank, but is instead a company that provides cash advances. (The name Kabbage is a deliberate misspelling of the word 'cabbage', which in some communities is slang for money.)

Process

Kabbage only funds established merchants, so before applying, you'll need to have an active merchant account with a reasonable income stream. Your chances of receiving funding are better if you have solid customer reviews. Applying for a loan takes as little as ten minutes, and funding can come within minutes straight to your PayPal account. As part of the application process, Kabbage asks merchants to set up automatic payments from their merchant PayPal account to Kabbage's account. Payments are also accepted through their website and by mail. Once approved, Kabbage deposits the funds into your PayPal account. Kabbage is willing to increase funding to merchants as the number of products they list increases, so that the amount of cash provided can grow with the business.

Cost

The company charges a flat rate for each $100 advanced. The exact amount charged can vary depending on a variety of decision factors (see below). Kabbage pays all PayPal fees, and it does not charge start-up, monthly, or annual fees. Further, it does not charge a penalty to merchants that pay back its advance before the deadline.

Each month, merchants are required to pay back a minimum of one-sixth of the total cash advance. At this pace, a merchant would ideally repay the advance within approximately six months.

 

Decision Factors

Kabbage decides whether or not to approve funding based in large part on a seller's Amazon, eBay, or Yahoo rating. Kabbage believes that sellers with higher ratings are also more likely to make regular payments and soon will also factor in a company's interactions with customers on Facebook, and will consider whether its owners play Facebook games. (Kabbage intends to learn whether people who play games on Facebook are more or less likely to pay money.) Traditional credit scores are also used to evaluate creditworthiness.

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Kabbage isn't the right choice for everyone, but for established online retailers, it's an excellent option. We are an affiliate of Kabbage. It offers exceptionally fast approval rates for short term funding, with remarkably little hassle. It is an excellent option for online retailers that have found that traditional banks are unwilling or unable to meet their needs. Kabbage makes online business Grow. Sign up with no obligation today!