Firstly, I am truly sorry for that horrible pun but if you’ve read my articles, you have to be prepared for bad jokes. Today’s startup deals with something that’s very important to us all, money, specifically loans. For some of us getting a loan may be our only option for our brand new car or (unfortunately) our college tuition costs but the ease of obtaining loans varies from person to person and business to business; sometimes it can even seem impossible.
Car and educational loans are some of the easier to get loans but what about business loans? Large corporations with a proven track record of success and reliable profit don’t often have difficulty with getting loans but when it comes to small business loans, entrepreneurs often feel the heat. In response to this, some banks have changed their criteria for assessing small business loans and small businesses alike have found ways to make themselves more attractive, it’s with this in mind that Kabbage was started.
Kabbage is an artificial intelligence banking startup that uses its learning algorithms and data gathered from public profiles online to draw up ratings for small businesses. These ratings help them look at additional factors (in addition to traditional information) to determine which loan options best work for small businesses and if they can be approved. So far they have served more than 100,000 small businesses.
At Kabbage, we’re as proud of our culture as we are of our products. Through dedication to a clear set of values, we’ve created an open environment that encourages close collaboration and the sharing of ideas. The Kabbage community is exceptional because we respect one another, care deeply about each other and work toward the same goals: driving innovation and improving through data and automation.
Small business owners can apply in minutes on their website or through the Kabbage app downloaded from the Google Play or Apple App stores. Kabbage looks at factors like business performance and not just the business credit score, which may be limited if small businesses are just starting up and haven’t received and paid many loans yet. By connecting their business account and other business services, small businesses can avoid having to fill out long forms. Examples of business services which can be linked include Intuit QuickBooks, eBay, Amazon, PayPal, Xero, and Stripe.
There are minimum qualifications for applying, the business must be at least a year old. The business revenue must also be at least $50,000 each year or $4,200 a month (over the past 3 months).
The application is free and, just like a regular loan, the small business can choose not to accept the loan once approved. Companies can create a login and provide basic business information to Kabbage. Next, they will link their business accounts through their secure website which allows their business revenue to be reviewed. Lastly, the businesses can apply for the loan and receive a decision. The financial performance indicators that Kabbage uses includes revenue consistency, cash flow, and business credit information.
Their loans allow the business to withdraw as much as they need when they need it and there aren’t any prepayment penalties or hidden fees. Companies may be offered lines up to $250,000. Loans are offered for a payment period of 6 to 12 months with a simple fee each month that the business has no outstanding balance. This means that small businesses aren’t charged interest on top of their regular loan payments each month, which could make it easier for them to repay.
That’s not all that Kabbage does, their sister-organization, Karrot offered personal loans up to $35,000 for various needs (debt consolidation, weddings, medical bills etc.) and they also have several initiatives to give back to the community. Currently, Karrot is servicing existing loans but not opening new loan accounts to consumers, as they have vowed to focus more heavily on their original startup, Kabbage.
As for their community initiatives, Kabbage has an organization called Kabbage Kares that gives back to the community by giving to local organizations like Camp Twin Lakes, the Boys & Girls Club, and the Atlanta Food Bank. In the true startup spirit, Kabbage even offers the Kabbage Entrepreneurs Scholarship prize which extends $1,000 to entrepreneur students.
Whether you love them for their works, their adorable name or their options for small businesses, for business owners Kabbage is a breath of fresh air. This startup also speaks to the real need for small business with limited records and resources to receive loans based on more variable economic indicators than just a credit score.