Kabbage vs Fundbox: Which Line of Credit is Best for Your Business?
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If you are looking for quick financing for your small business, Kabbage and Fundbox are two online lenders you may want to consider. Both provide the ability to apply for financing online in a relatively simple and straightforward process. In most cases, you’ll know within minutes if you’ve been approved, and if you have, funding will often be available within hours.
Here we compare Fundbox and Kabbage. A line of credit provides your business with funds that you can access as needed; instead of borrowing a fixed amount, you can borrow as much as you need up to your available credit limit. As you repay the loan, these funds become available again to borrow.
You only borrow the amount you need, up to the amount you were approved for. This means that you will not pay interest on funds that you have not accessed and that there is no obligation to use the funds once you have been approved.
Kabbage and Fundbox leverage technology to deliver a lightning-fast approval process. Instead of requiring applicants to submit copies of bank statements and other documents to an underwriter, these platforms allow the borrower to link various sources of business data such as a business bank account, credit card software, accounting or, in the case of Kabbage, sales platforms such as Amazon or Etsy. Using this data, they can quickly determine whether the business is eligible for funding and, if so, by how much.
However, these lines of credit may not be the cheapest source of capital. In some cases, you can even get a lower interest rate on a small business credit card. At the same time, however, these options can be cheaper than other sources of quick finance.
Kabbage requires applicants to have been in business for at least a year, with an annual income of at least $ 50,000, or at least $ 4,200 per month for the past three months. In addition to these minimum requirements, Kabbage will analyze business performance, including cash flow and revenue consistency.
The credit will also be reviewed. Kabbage will examine the owner’s personal credit. Like most credit 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 prevent you from qualifying.” They are more interested in the business performance of your business.
If you are approved for a Kabbage line of credit, you can access the funds online through your account; using the Kabbage app; or by using the Kabbage Card for any point-of-sale purchase wherever VISA is accepted. The funds will be deposited into your bank account within 24 hours for the majority of customers the next day, or instantly into your Paypal Business account.
Kabbage loan costs are described as a monthly fee, ranging from 1.5% to 10% of the loan amount. (Borrowers are informed of the fees to which they are entitled when approved.)
Cabbage provides a free calculator which allows business owners to calculate the cost of their loan. Additionally, approved borrowers will receive a disclosure from the SMART box that contains details of 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.
Cabbage price example
Let’s say you borrow $ 25,000 and you are approved for a 6 month loan with a 3% fee (fees range from 1.5% to 10%). Using Kabbage’s calculator, you will pay $ 2,750 in total fees if you pay off the loan on time.
Fund of funds
The Fundbox Line of Credit is a smart approach to financing small businesses, with Read More
Fundbox is also leveraging technology to provide quick loans to small businesses. Borrowers combine their business bank account or business accounting software to make a decision, often in three minutes or less.
The minimum requirements include at least three months of activity and a business checking account. Income of at least $ 50,000 per year is recommended.
Fundbox is flexible when it comes to personal credit scores; there is no specific minimum credit score requirement.
Once approved, you can receive funds as early as the next business day, as long as you request your draw by noon Pacific Standard Time, Monday through Thursday.
Fundbox also describes costs as charges. Fees start at 4.66% of the amount of the draw. (The withdrawal amount is the amount you actually withdraw, relative to the amount available.) Fees may vary over time; the costs will be disclosed before you withdraw from the line of credit.
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 get approved at their lowest fee of 4.66%. Using The Fundbox Calculator, your weekly payments will be $ 1,135.31 and you will pay a total of $ 2,247.50 in fees. This translates into an APR of 39%.
|Kabbage unsecured line of credit||Fundbox Line of Credit|
|Qualifications||Must have been in business for at least 12 months.||Must have been in business for at least 3 months and have a business checking account.
A minimum annual income of $ 50,000 is recommended.
|Rising||Up to $ 250,000
(Loans over $ 150,000 require manual review)
|$ 1,000 to $ 100,000|
|Repayment period||6 or 12 months||12 or 24 weeks|
|Penalty for early repayment||No. Paying early can save money.||No. Paying early can save money.|
|Typical financing timeframe||Less than 24 hours||Less than 24 hours|
|Personal guarantee||Not required.||No, but can be offered to certain clients in exchange for an increase in the line of credit.|
|UCC deposit||Kabbage reserves the right to deposit.||No|
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