Kabbage.com: An Online Retailer's Best Friend

Kabbage.com is an Internet finance company that caters to an underserved market: online merchants. Kabbage.com's unique target demographic mainly includes merchants that sell on eBay, Yahoo and Amazon.com. For example, merchants that sell handmade soaps on Amazon, kayaks on Yahoo, or handmade quilts on eBay could all expect to receive funding from Kabbage.com. Merchants can use the money to purchase additional products or materials, to hire help for shipping and packaging, to maintain cash flow, or for any other specified purpose.

Kabbage.com believes that online merchants are underserved by other financial service firms, and so its entire business focuses on advancing cash to online businesses. Accordingly, Kabbage.com does not provide small business loans to brick-and-mortar merchants, and it only provides advances for businesses based in the United States.

Technically, Kabbage.com is not a bank, but is instead an ordinary company that provides cash advances. (The name Kabbage.com is a deliberate misspelling of the word 'cabbage', which in some communities is slang for money.)

Process
Kabbage.com only funds established merchants, so before applying, you'll need to have an active merchant account with a reasonable income stream. Your chances of receiving funding are better if you have solid customer reviews. Applying for a loan takes as little as ten minutes, and funding from Kabbage.com can come within thirty seconds. As part of the application process, Kabbage.com asks merchants to set up automatic payments from their merchant PayPal account to Kabbage.com's account. Kabbage.com also accepts payment through their website and checks sent by mail. Once approved, Kabbage.com deposits the funds into your PayPal account. Kabbage.com is willing to increase funding to merchants as the number of products they list increases, so that the amount of cash provided can grow with the business.

Cost
Kabbage.com charges a flat rate for each $100 advanced. The exact amount charged by Kabbage.com can vary depending on a variety of decision factors (see beneath). Kabbage.com pays all PayPal fees, and it does not charge start-up, monthly, or annual fees. Further, it does not charge a penalty to merchants that pay back its advance before the deadline.

Each month, merchants are required to pay back a minimum of one-sixth of Kabbage.com's cash advance. At this pace, a merchant would ideally repay Kabbage.com within six months.

Decision Factors
Kabbage.com decides whether or not to approve funding based in large part on a seller's Amazon, eBay, or Yahoo rating. Kabbage.com believes that sellers with higher ratings are also more likely to make regular payments. Soon, Kabbage.com will also factor in a company's interactions with customers on Facebook and will even consider whether its owners play Facebook games. (Kabbage.com intends to learn whether people who play games on Facebook are more or less likely to pay money.) Kabbage.com also uses a traditional credit score to evaluate creditworthiness.

Conclusion
Kabbage.com isn't the right choice for everyone, but for established online retailers, it's an excellent option. It offers exceptionally fast approval rates for short term funding, with remarkably little hassle. It is an excellent option for online retailers that have found that traditional banks are unwilling or unable to meet their needs.

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