Get Cash to Grow your Business - Kabbage Review

Would a cash injection help grow your business? What if you could order a few thousand dollars worth of new inventory to sell? How much would it help if you could hire a staffer to help? Could $1000 towards advertising transform your business? 

Maybe Kabbage can help. 

Kabbage provides cash advances to online retailers to help them grow their businesses. Their service is available to sellers on eBay, Amazon, Yahoo, Shopify and Etsy. Previously, Kabbage was only available to sellers in the US, but  as of last month, Kabbage is now also available in the UK! 

How Kabbage works 

Signing up to Kabbage takes just a couple of minutes and you can get money transferred into your PayPal account instantly, or within 3-5 days if you are using a regular bank account. The money is then yours to use as you please to grow your business. Most people spend the money on wholesale product sourcing, but you can use your cash advance from Kabbage to hire staff or advertise your business. 

To get a Kabbage loan, you need to make at least US$1000 worth of sales each month. The sales don't all have to come from one store, but you will need to prove your sales totals using Kabbage's secure login. 

Repaying your Kabbage cash advance - What will it cost you? 

Kabbage has a very simple repayment system. You get the cash advance for 6 months, and after that 6 month period, you need to have repaid your advance in full. During the 6 month loan period, you pay one sixth (or 16%) of the loan of each month. On top of the repayments of what you borrowed, you will pay a fee of 2-7% of the advance as a fee. The exact % depends on how much you borrow.  The payments are taken directly from your PayPal or bank account so you have to make sure you have the cash available to make the repayments starting in month one. 

Here's a graphic from that explains how repayments work:

With this in mind, I would suggest having the cash available to cover the cost of at least the first month's minimum. Why? Let's say you borrow $10,000 to order some stock from a wholesaler. Given how long it can take to order stock, get stock deliverd and listed online, there could be a couple of weeks in lead time before you start making money off the loan. You'll need around $1600 to repay the first month of your loan, but you might not yet have the cash coming in. 

If you have cash ready to cover your first month, it will eliminate pressure to sell stock off quickly. 

What are other online sellers saying about Kabbage? 

If you want to read some success stories on the Kabbage website, you can do so here. Here are some unbiased words about Kabbage that I found on the web:

"I just signed up a few minutes ago with Kabbage and I'm very impressed with how professional this company is... They have very good reviews and for someone like me that doesn't have good credit and can use a little extra money to buy supplies...this was perfect. They started me out with more than I thought I was going to get... And the more I'm with Kabbage the more advances I can get. This is great!"

Etsy seller, Dee 

"Kabbage may not be the cheapest money out there but they are competitive to the other sources MOST small biz resort to. Let's face it, banks are not interested in our business. I give Kabbage credit for the growth of my business . Being able to access money when I need it makes me able to get better deals. Just remember it's a short term (6 month) process and plan accodrdingly."

- eBay seller, Katskloset

Bad reviews about Kabbage

I actually found a whole lot of fantastic reviews about Kabbage and to be honest, I found it hard to find a bad review about them. I looked around online and tried to find some negative feedback, but I couldn't find anything (other than the comment below which didn't actually come from a Kabbage customer, it came from a friend of a Kabbage customer). If you stumble across anything, leave me a comment! 

Make sure you can afford to pay Kabbage back!

As with all loans or cash advances, you need to make sure that you have afford to service it. As one Etsy seller mentioned, Kabbage don't fool around when it comes time to get their money back from you. 

"It's true they will give you money, but what ever you do don't become late on the payments or they will raid your pay pal account like a thief in the night. This happened to a friend of mine, when he couldn't pay loan back on time, due to slow sales and it became a nightmare!"

Kabbage aren't in the wrong for recovering their money. They're a business, not a charity, after all! Just make sure of two things when you consider getting a Kabbage cash advance:

1. You fully understand your obligations to service the advance and repay it within the 6 month period. 

2. Only use the cash advance to grow your business: Don't waste the money on a product that you haven't done market research on. If you buy dud products that you can't sell, you could run into problems repaying the cash advance. 

Do your due diligence

Cash advances aren't right for every business. I highly recommend that you do your due diligence before you take on a cash advance or a loan from anyone. Make sure you crunch the numbers and make sure any loan or advance you get will actually be profitable for your business. Always read the fine print and if you can, get a trusted friend or family member to take a look over it as well. 

With all that said, if you are looking to grow your eBay business, I highly reccommend that you give Kabbage a try. It's free to sign up and see how much you can borrow and how much the cash advance will cost you. 

Recommended reading: Ecommerce Breakdown: Amazon Webstore vs. BigCommerce vs. Shopify

What would you spend the money on if you could get a loan from Kabbage? 


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Comments (8)

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Lisa Yates on 8:44 9 Mar
Is this available in Australia?
Tabitha Stuckey on 15:44 22 Mar
Thank for the info. I heard about Kabbage recently and wanted to look into it further.
Don't drink the Kool Aid! on 7:44 2 May
Scam & Bad communication! Sent my paypal account an echeck for $500 to come out right away to my bank account. When they said they would have management email me to make arrangements for my paymernt plan instead they echecked me that day & expedited it so it cleared in one day instead of 5 days like it was supposed to. Don't fall for this, borrow from someone else like a bank.
Irene Vallejo on 22:58 8 Sep
Hi @danuketrading
Sorry it is not. From their website, it states "Kabbage provides working capital in both the United States and the UK."
Roy Burgess on 19:56 23 Dec
Stay away from Kabbage. They may be legal, but legal doesn’t make them ethical. First, money from Kabbage is not a loan and therefore doesn’t fall under regular bank loan regulations and therefore they can charge whatever fees they want. There is no annual percentage rate since it isn’t a loan, however, if you calculate the fees to an apr, the cost of an “advance” is way, way, way higher than your average credit card. They throw around the 10% figure, but that’s based on one advance over a 1 month period. Do the math on what that means over a year’s worth of time if you get behind in your payments, and you might as well put your extra earnings in a pile in the yard and roast marshmallows over a bonfire.
Kabbage advances are actually sales of your future receivables. In a nutshell, you pay the exorbitant fees and pay them back with 100% of your future sales through Paypal. Have a low sales month of say $200 and owe $300 to them? You better have that extra $100 sitting around to transfer to Paypal or they will take 100% of all your sales, multiple times per day, until they get that other $100. So what that basically means is that if you even get that extra 100 in sales, you better have some money somewhere to pay postage, fees, etc, because you won’t be able to use the money from your sale to even get the product out the door. Future receivable “loans” aren’t necessarily a bad thing. It’s been going on for years, but the difference between Kabbage and regular receivables based on credit card sales is that when you have a low month in sales, you only get charged a percentage of your sales in a fixed period of time until the balance is paid back. So you’re never going to have a zero balance in your bank account even if you have a low sales month since the legit and ethical advance companies only take a percentage. Kabbage will take EVERYTHING you earn from EVERY sale until you pay back what you owe them. AWEFUL business practice for small business, but lots of Kabbage to Kabbage! So if you do have a low month in sales, as a grand prize for doing business with Kabbage, you won’t even have 1 cent in your paypal account to cover expenses for shipping something out.
Kabbage employees and those borrowers who try and delude themselves that it’s a good deal write positive reviews to bury negative reviews like this one will blow smoke and say “you should have known” since it’s a contract that you were getting into before you took the loan. That is a fair argument, however, if you’re the typical small time seller on ebay or elsewhere on line, you probably don’t have a team of lawyers to interpret the contract you sign. Their basic tactic is to suck people in with the “easy money in minutes!” gimmick and hope people DON’T read the fine print. These people are their gold mines and they are only too happy for people to pay late since the fees are where they make all the money. Again, a business can do whatever it wants as long as it’s within the law. But ethical? Hardly. Kabbage is no better than Bubba down the street operating the Payday Loan in the strip mall. Bubba also falls back on the excuse that people who aren’t as smart as their lawyers deserve to be taken advantage of.
Be smart, but if you need to do something smarter there are other options out there. Using credit cards for example. Even a high risk 30% apr credit card is much cheaper than these people. Instead of paying a monthly 10% fee to these people, you’d be paying 2-3% per month on a 30% card. Smarter than using Kabbage, but still not a good way to fund your business using the plastic like that. Next, there is a traditional bank loan where you get approved once from a bank (yes, far longer than a few minutes through Kabbage), but it’s a credit line far cheaper than credit cards and Kabbage. Once you’re approved you can use the credit line instantly like a credit card at far cheaper rates. If you’re unable to get approved through a traditional bank that earnestly takes a look at the profitability of your business, should you really be borrowing anyway? Lastly, there’s the smartest way for your typical online seller. Use your profits to buy more goods. ZERO interest rate and you keep all your money. Of course that option means that you should have a profitable business. Unfortunately too many borrow from Kabbage not having a solid business plan and then are in way over their heads if they miss even one payment. Imagine owing these guys a couple thousand dollars, having a couple low months in sales, and having to sweat over them taking all of your money until they get their couple thousand back. Every business has unforeseen slow months. The only business coming out on top during those slow months is Kabbage who you’ll be a slave to piling up fees hoping that you’ll eventually have a terrific month so you can pay back Kabbage. Taking a loan or a future receivables advance to fund your business isn’t necessarily a bad thing if you can turn around quickly selling something. But you can do that for FAR LESS than 10% through previous mentioned ways. 10% is the minimum you’ll pay Kabbage. If you have that slow month, you’ll be paying multiples of 10% with a constant zero balance in your paypal account until it’s paid back.
The one positive thing about me making the mistake of doing business with this unethical company is that I learned another life lesson and can hopefully benefit those who search for reviews on Kabbage and provide some information on it without losing profits to them. I’m on a mission. Smart business people DO NOT DO BUSINESS WITH KABBAGE. There are FAR LESS expensive ways to grow your business. Take the time to research them.
SDC on 15:35 16 Mar
Can't find a bad review? Try this...

They try to get around the law by calling it a "cash advance" instead of a loan. Just go to their site and estimate how much this "cash advance" is going to cost you. I can guarantee this company is going to get sued for usury as soon as it become known well enough and enough people complain about the high rate.

An example from the Kabbage website...
A cash advance of $5,000 costs $600. That means borrow $5,000 and pay back $5,600 in 6 months. That is a 40.047% per year interest rate. Go ahead. Find an interest rate calculator online and do the math yourself.

Who wants to pay 40% interest? You are better off using a credit card...even the highest rate credit cards for the worst credit cannot charge you 40% interest.

Barb on 3:40 10 Sep
Kabbage is a nightmare I've had twice!!!!!! I have one more payment and I am done with them forever! I had no idea - blinded by need - what the fees would add up too. I got lucky in that I was approved for PayPal Working Capital, which I love for their reasonable fees and easy payback system, but everyone is right - you're better off by far with a 25-30% credit card!
TheZone on 21:19 7 Jan
Kabbage is a trap.
1) Why would you pay the sky high interest rates ('fees') rather than a credit card which guaranteed will cost you less over 6-12 months? Because your business can't qualify because you already have high debt ratios? Then you shouldn't be using Kabbage, the business is not healthy/profitable enough. In fact, you could get a credit card w/ 0% interst for 12 months.
2) 1) Why would you pay the sky high interest rates ('fees') rather than open a credit line w/ your primary bank. Because your business can't qualify because you already have high debt ratios? Then you shouldn't be using Kabbage, the business is not healthy/profitable enough.

If you're in those scenarios Kabbage will get you deeper in the hole. The only scenario that makes sense is if you have some magical high volume / high margin product that you can turn around in 30-60 days. Impossible.


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