Even with the economy relaxing somewhat, bank loans are still a little tight and VC money is not always available for small business financing. So SME entrepreneurs today are seeking more creative ways to obtain capital to finance their business. One such new method to secure funds is from the appropriately named platform, Kabbage.
Online Merchant or Seller?
The one caveat required to obtain working capital via Kabbage is your business has to be an online merchant or seller on marketplaces like Amazon.com, Etsy, eBay, Shopify or Yahoo.
Marc GorlinTo qualify, Kabbage will review your past sales records, credit history, customer traffic, pricing, inventory (compared to your competition), credit-worthiness and online reviews. To date, co-founder Marc Gorlin was quoted in a Techcrunch review that indicated his Atlanta-based company had extended over 60,000 advances (nearly 40,000 in 2012) for over 100,000 business accounts. In total, Kabbage is looking to advance over $100 million in funds, a 105 percent increase over 2012.
Taking as little as 7 minutes (guess they've been timing themselves), Kabbage assures those in need of cash advances that their service is quick and flexible. Their promo states, "With a Kabbage Advance, you get working capital for the things you need to succeed without the hassles of the traditional business lending process."
With ease of entry, the beauty of their service lies in no hidden fees, and no upfront costs to small business owners until they actually take the money.
Then, if you return amounts advanced in equal monthly transfers (plus costs assessed) from your payment account, or return the entire advance amount early to save yourself the remaining costs -- it's your choice, and there is no additional fees for making transfers early.
This payback policy allows small business operators to budget in advance, since they know that their total cost will typically range from 2%-10% based on their store's monthly revenue and their Kabbage score.
Kabbage Partners with Square
Square & KabbageFor those business owners working with the mobile payment system, Square, they can now sign up and get access from $500 to $50,000 to grow their business using their Square data. “Millions of small businesses, from local dog groomers to wedding photographers, now have access to Kabbage funding simply by using Square to accept payments. Square gives these businesses the ability to get paid on the spot, while Kabbage enables them to get funding just as quickly,” said Gorlin.
There's an App for that too!
Kabbage has officially announced the launch of its new apps for both iOS and Android smartphone users -- which will enable Kabbage users to quickly add funds to their associated bank or PayPal account while on-the-go. The Kabbage apps allows customers to view their balance, make transfers, and select the amount of cash they need to fund a particular purchase or opportunity they may encounter while away from their PC.
Social Climbing can Help Your Kabbage StatusThe service also enables merchants to benefit from engaging in online social activity. "Kabbage has launched the SocialKlimbing feature of its system, which enables online merchants to associate their social activities with their Kabbage account. By so doing, Kabbage incorporates information from these social media sites to underwrite risk and enable online merchants to receive a benefit by actively engaging with audiences interested in their products and services."
So Kabbage does appear to be the type of benefactor today's savvy small business owner can benefit from -- as long as they are a reputable merchant whose financial data is sound and doesn't present a risk -- like, say -- what cartoonist Randy Glasbergen hints at here. And Lord knows, there's a lot of online Nigerian princes out there!