If you’re looking for fast funding for your small business, Kabbage and Fundbox are two online lenders you may want to consider. Both offer the ability to apply for financing online in a relatively simple and straightforward process. In most cases, you’ll know in minutes whether you’ve been approved, and if you are, the funding will often be available to use within hours.
Here we compare Fundbox and Kabbage. A line of credit provides your business with funds you can access as you need them; instead of borrowing a fixed amount of money, you can borrow as much as you need up to your available credit limit. As you pay back the loan, those funds again become available to borrow.
You borrow just the amount you need, up to the amount for which you’ve been approved. That means you won’t pay interest on funds you have not accessed, and there is no obligation to use take the funds once you’ve been approved.
Both Kabbage and Fundbox leverage technology to offer a lightning fast approval process. Instead of requiring applicants to submit copies of bank statements and other documents to be reviewed by an underwriter, these platforms allow borrower to link a variety of business data sources such as a business banking account, accounting software or, in the case of Kabbage, popular seller platforms such as Amazon or Etsy. Using this data, they can quickly determine whether the business qualifies for funding and, if so, how much.
However, these lines of credit may not be the cheapest source of capital. In some cases, you may even get a lower interest rate on a small business credit card. At the same time, though, these options may be less expensive than other fast funding sources.
Kabbage requires applicants be in business for at least one year, with annual revenue of at least $50,000, or at least $4200 per month for the last three months. In addition to these minimum requirements, Kabbage will analyze business performance, including cash flow and consistency of revenue.
Credit will be reviewed as well. Kabbage will review the owner’s personal credit. Like most lending companies, stronger credit can help you qualify. (You can check your personal and business credit for free on Nav.) However, Kabbage says that beyond the minimum requirements, “one factor won’t necessarily keep you from qualifying.” They are most interested in the business performance of your company.
If you are approved for a Kabbage line of credit, you can access funds online through your account; using the Kabbage app; or by using the Kabbage Card for any purchase at the point of sale wherever VISA is accepted. Funds will be deposited to your bank account within 24 hours for the majority of customers, next day, or instantly into your Paypal Business account.
Costs for Kabbage loans are described as monthly fees, ranging from 1.5% to 10% of the loan amount. (Borrowers are told the fee they qualify for when they are approved.)
Kabbage provides a free calculator that allows business owners to calculate the cost of their loan. In addition, borrowers who are approved will receive a SMART box disclosure which contains details about their rates and terms, including an Annual Percentage Rate (APR).
Customers can pay monthly. There is no penalty for paying faster, and you can save money by doing so.
Kabbage Pricing Example
Let’s say you borrow $25,000 and are approved for a 6 month loan with a fee of 3% (fees range from 1.5% to 10%). Using Kabbage’s calculator, you will pay $2750 in total fees if you repay the loan on schedule.
To translate that cost into an APR, you can use Nav’s free calculator and enter the loan amount plus the amount of the first two payments ($4917 each) and the amount of payments 3-6 ($4479 each). This results in an APR of 37.5%.
Tip: Nav’s free calculators can help you understand the cost of small business financing by translating costs to an APR to help compare offers.
Fundbox also leverages technology to make fast loans to small businesses. Borrowers link their business bank account or business accounting software to get a decision, often in three minutes or less.
Minimum requirements include at least three months in business and a business checking account. Revenue of at least $50,000 annually is recommended.
Fundbox is flexible with regard to personal credit scores; there is no specific minimum credit score requirement.
Once approved, you can receive funds as soon as the next business day, provided you request your draw before noon Pacific Standard Time Monday through Thursday.
Fundbox also describes costs as fees. Fees start at 4.66% of the draw amount. (The draw amount is the amount you actually withdraw, versus the amount available.) Fees may vary over time; costs will be disclosed before you draw on the credit line.
Payments are debited from the business owner’s bank account on a weekly basis. There is no penalty for paying faster, and you can save money by doing so.
Fundbox Pricing Example
Let’s say you borrow $25,000 for 24 weeks and you are approved at their lowest fee of $4.66%. Using Fundbox’s calculator, your weekly payments will be $1135.31 and you’ll pay a total of $2247.50 in fees. This results in an APR of 39%.
|Kabbage Unsecured Line of Credit||Fundbox Line of Credit|
|Qualifications||Must be in business for at least 12 months.
|Must be in business for at least 3 months and have a business checking account.
Minimum annual revenue of $50,000 is recommended.
|Amount||Up to $250,000
(Loans above $150,000 require manual review)
|Repayment Period||6 or 12 months||12 or 24 weeks|
|Early prepayment penalty||No. Paying early can save money.||No. Paying early can save money.|
|Typical time to fund||Less than 24 hours||Less than 24 hours|
|Personal guarantee||Not required.||No. But may be offered to select customers in return for a credit line increase.|
|UCC Filing||Kabbage reserves the right to file.||No|
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