Are you looking for an e-commerce loan to open or expand your business? You are in luck. Some of the best terms and conditions for e-commerce loans for small to medium businesses are available from Kabbage, an online lending platform that requires a FICO score of only 640 or higher. Kabbage is a reliable and flexible online lender that offers cash almost immediately, it provides its clients a quick decision by allowing them to connect their company checking accounts during the application process. There are many advantages to getting a Kabbage loan, but some disadvantages as well. Therefore, if you are interested in learning more, continue to read the article below and learn everything you need about Kabbage, the good and the bad.
Advantages
Accessible to new enterprises and entrepreneurs with fair credit
They are a startup-friendly lender that allows borrowers with 12 or more months to be approved for a line of credit. The credit lines for new businesses can be used to fill in cash flow shortages, pay for immediate needs, or seize unanticipated possibilities.
Kabbage can be a viable option for access to operating capital if you have fair credit and are unable to get a bank business loan. Kabbage has a 640 minimum credit score requirement. However, the company mostly looks at information from the accounts you link, your typical monthly revenue, and how long you’ve been in business to analyze your application, decide your credit limit, and set your fees.
Quicker access to money than with traditional lenders
For business owners who require cash right away and do not mind paying more for speed, Kabbage is a fantastic choice. There is no paperwork involved in the application procedure. As an alternative, you link a business bank account, accounting program, or payment service (like PayPal or Square) to the Kabbage platform, and they utilize information from these accounts to determine your eligibility.
There are no additional costs
Kabbage does not impose any additional costs, in contrast to certain lenders, who may include draw fees or account management fees with their line of credit products. When you have a balance on your Kabbage line of credit, you will pay a monthly fee which is the equivalent of interest. Application fees, origination fees, yearly fees, account maintenance fees, documentation fees, and draw fees are all waived by Kabbage. Additionally, you have the choice to repay your loan early without incurring penalties.
Disadvantages
Complicated charge schedule
Instead of the more customary interest rate, Kabbage has a fee each month that you have to pay. This fee is in addition to the monthly principal payments on your loan. Your loan length, creditworthiness, and other criteria will all affect the specific fee you pay. The total monthly costs for the loan period range: between 2% to 9% during a six-month period, 7.5% to 18% for one year, and 15.75% to 27% for 18 months.
Unable to develop business credit
Payment history is not reported by Kabbage to commercial credit bureaus. You’ll need to locate an alternative solution if you want to establish business credit through on-time payments. Having good business credit can make you eligible for larger, lower-interest business loans in the future.
Not appropriate for all companies
Kabbage does not provide any other offer, such as term loans or invoice finance, and exclusively provides lines of credit for businesses. Consider other lenders if you’d prefer a different kind of business loan.
Kabbage lines of credit are also only offered in small sums, up to $250,000, and for brief durations, up to 18 months. Businesses that seek longer loan terms or greater loan amounts will need to look into other financing options.
Conclusion
Even with all its disadvantages, Kabbage is still a great option for small businesses. They are one of the best on the market, and if the above-mentioned terms and conditions work for you and your business, your search might be over. And if not, do not worry the market has a wide range of lenders, so we are sure you will find the right one for you.