I sell antiques online. Saw an ad on eBay that said I was pre qualified for money, so I applied, and within 2 minutes I got a response that I had $2000 with an opportunity to get up to $10000. I took out $1000 to buy inventory, and was able to pay it back in 2 months. It really saved me to be able to take advantage of an inventory opportunity that I would not have been able to other wise. Yes it is more expensive than some other ways to get money, but where else can you get money that fast, delivered to your paypal account, with out using just a credit score? I will keep using this for sure! Seems like banks don't care about businesses that are doing new things so it is cool that Kabbage is doing this for us.
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It seems to me that they are not fully up front in explaining the full cost of capital in the loan structure, by emphasizing the 2-7% top line cost.
" Your cost will be typically 2%-10% based on your store's monthly revenue and Kabbage score."
You would pay 2% If and only If you pay back the entire balance in the same billing cycle, and if you are lucky ennough to get the 2% rate.
The on site example of Ms. Thompson getting a $10k loan, the first two months clipped for only 3%, followed by 4 months of 1%.
Since this is a fee on the total loan, finding the equivalent APR is rather easy: 3+3+1+1+1+1=10, but since this is a six month loan the APR would be 20%. We can see this in the listed cost of loan in the Ms. Thompson example
- Advance: $10,000
Total Due: $11,000
1000 on 10,000 is 10% for six months, or 20% annually.
Caveat Emptor, I am not saying this is a bad thing; like stated above, if you can manage it well this is a good source of short term funding, and let people like Ms. Thompson pay Kabbage's bills.
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Kabbage offers working capital to small businesses. Approved borrowers get access to a set line of credit, and then can decide on their own how much of that they want to borrow. Applications take place entirely online, and Kabbage reviews a variety of business data (not just your credit) in order to make their decision, making Kabbage a unique option for small business owners.
**Annual Percentage Rates, terms of loan, and monthly payments presented are estimated and were created based on analysis of information provided by the consumer and available rate information from lenders. While efforts have been made to maintain accurate information, the loan information is presented without warranty and the estimated APR or other terms presented do not bind any lender. Lenders generally have a range of available APRs (for example, a lender’s range might be 2% to 12%) and only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend upon factors evaluated at the time of application, which may include credit score, loan amount, loan term, vehicle information, credit usage and history. All loans are subject to credit review and approval. Additionally, model year, loan-to-value, minimum loan balance mileage, income, debt, etc. restrictions may apply. When evaluating offers, please review the lender’s Terms and Conditions for additional details.