If you are a small business owner looking for a cash infusion to either get started or to grow, traditional financial lending institutions may not be the best answer. Timelines to funding can be slow and the upfront documentation is often burdensome.
Kabbage operates a bit differently from a traditional lender. Approved borrowers are granted access to a line of credit that they can be drawn upon when needed.
Even if your own financial status is not strong, Kabbage may deem you to be an eligible borrower. However, the amount of credit extended will be less than that of applicants who meet more stringent requirements.
Funding Circle also has a twist on the standard lending process. It is a marketplace that connects borrowers in need for capital with investors seeking to earn a return on their money.
It also offers borrowers ready access to cash, provides fast processing times, and earns high marks for its relaxed repayment terms.
Here we compare Kabbage vs Funding Circle to see which lender comes out on top.
Table of Contents
- Loan Amounts & Loan Terms Comparison
- Fee Comparison: Kabbage Vs Funding Circle
- Why Choose Funding Circle?
- Why Choose Kabbage?
- Kabbage Vs Funding Circle: Who Wins
- Kabbage Vs Funding Circle Comparison Summary
Loan Amounts & Loan Terms Comparison
The minimum loan amount at Funding Circle is $25,000.
For businesses in need of more capital, Funding Circle can loan as much as $500,000 to qualifying applicants.
The interest charged on these loans depends on the creditworthiness of the borrower, and ranges anywhere from 10.9% to 35.5%.
Loan durations with Funding Circle range from 1 → 5 years.
Kabbage works a bit differently as it provides a line of credit rather than a one-time personal loan or business loan.
With Kabbage, a credit line as high as $250,000 is offered to qualifying applicants.
4 out of 5 stars
via Kabbage secure site
Once approved, funds can be accessed as needed, and there is no obligation to actually use the credit that has been extended.
Kabbage offers 6- or 12-month loan terms.
Borrowers pay a tiered monthly fee any month that they carry a balance on their line of credit.
A higher fee is charged in the early months, and it lowers somewhat for the remainder of the term.
|Funding Circle||–||$25,000 → $500,000|
|Kabbage||Up to $250,000||–|
Funding Timeline Comparison
Both companies offer quick-and-easy online application processes.
Kabbage can provide an immediate loan decision and it distributes funding to those who qualify within a couple of days.
Funding Circle informs potential borrows whether they have qualified in as few as 24 hours and borrowers may receive money in as little as 10 days.
Kabbage Vs Funding Circle
Funding Circle borrowers pay an annual percentage interest rate on the loan plus a 1% annual servicing fee.
This 1% fee is assessed at the beginning of each year in which a loan balance exists, and it is based on how much is still owed.
The servicing fee is included in monthly repayments, so it is spread out evenly over the year.
There is also a one-time loan origination fee deducted at the beginning. It varies from 0.99% → 6.99%.
|Origination Fee||Monthly Fee||Servicing Fee|
|Funding Circle||0.99% → 6.99%||–||1%|
|Kabbage||–||1.5% → 10%||1%|
Kabbage has a slightly different fee structure.
Because it offers a line of credit, borrowers pay nothing until they actually access the money they have available. At that point, a monthly fee is assessed.
This fee varies depending on the terms that were agreed to at the time that the line of credit was opened.
If borrowers choose a six-month repayment term, the minimum loan amount is $500.
The monthly fee will be between 1.5% and 10% of the principal.
>> Related: LendingClub Business Loans
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Why Choose Funding Circle?
Small businesses in need of a quick infusion of cash to finance a major project or product launch should consider Funding Circle.
Loan amounts range from $25,000 → $500,000.
This lending option is perhaps best suited for small businesses that need to buy expensive equipment or who are looking to make a major investment.
|FUNDING CIRCLE SPOTLIGHT|
3.5 out of 5 stars
via Funding Circle secure site
Because Funding Circle offers high loan amounts, the eligibility requirements are quite stringent.
The minimum credit score for borrowers to even be considered is 620, but the average score for approved borrowers is often north of 700.
Businesses must have been established for a minimum of two years.
On the plus side, no revenue minimums are required.
One reason Funding Circle is popular is because of its generous repayment terms. Loan repayments can be extended out as far as five years.
Borrowers may repay the entire loan off early without penalty.
Speed Of Funding
Borrowers can fill out application forms online in under 10 minutes.
From there, a loan specialist will contact prospective borrowers within two hours. Then, a variety of documents may be requested for verification purposes.
If the application is approved and the terms of the loan are agreed to, you can expect funding to arrive within 10 → 14 days.
Why Choose Kabbage?
Small businesses who are looking to grow should consider Kabbage as a possible source of capital.
Having a ready line of credit that can be used at any time gives borrowers access to cash when the need arises. It also allows the business to better handle debt-related expenses.
Qualified borrowers can access up to $250,000.
Whereas many lending companies today require borrowers to have been in business for 2+ years, Kabbage requires that companies have been in business for at least 1 year.
However, it will take a look at business revenues in making a determination of creditworthiness.
Specifically, it wants you to show a minimum of $50,000 over the past year or $4,200 per month for the last quarter.
Many borrowers will appreciate the fact that being approved for funds does not mean you need to actually make use of them.
Kabbage will not charge any fees if you do not access the line of credit, meaning it can be used as a safety net should you ever need it.
At the moment you use the line of credit, you will need to decide on a 6- or 12-month repayment term. There is no option for extending this out longer.
Speed Of Funding
Once a line of credit is established, the speed at which a loan is funded is rather quick. The application process is completed entirely online in a matter of minutes.
Depending on the documentation that is required, the decision process can take a week or more, but it is usually wrapped up in a few days.
Once approved, you can access the funds virtually anytime via website or by telephone.
Kabbage Vs Funding Circle:
|Kabbage Wins||Funding Circle Wins|
|✅ Fast Access To Cash: Kabbage is best for borrowers who need fast access to cash for smaller purchases.||✅ Lower Rates: With an APR that ranges from 10.91% to 35.5%, Funding Circle beats out Kabbage, which has an APR between 24% and 99%.|
|✅ Qualification Criteria: As opposed to Funding Circle, which requires borrowers to have two years of business history, Kabbage will lend to businesses that have only been in operation for one year.||✅ Faster Processing Timelines: Both Kabbage and Funding Circle can take a bit over a week to process applications. Funding Circle will distribute the full amount of the loan in one lump sum while Kabbage will make available a line of credit that the small business can tap into as needed.|
|✅ Lower Credit Scores Eligible: Kabbage bills itself as a lender that will look at multiple areas of performance outside of credit scores in determining the creditworthiness of a borrower. In contrast, Funding Circle will not even consider a borrower with a credit score under 620.||✅ Relaxed Repayment Terms: Funding Circle wins when it comes to repayment terms. A small business that needs time to pay back its financial obligation has up to five years to do so compared to the maximum of 12 months offered by Kabbage.|
|✅ Fewer Fees: Not only is there no loan origination fee at Kabbage, but the fact that the repayment term is a maximum of one year works to the advantage of the borrower in reducing cumulative interest charges.||✅ Loan Amounts: For those looking to borrow a lot of cash, Funding Circle wins. It offers a loan up to $500,000 for qualified borrowers. The maximum line of credit with Kabbage is $250,000.|
Kabbage Vs Funding Circle
When comparing these two lending options, it is helpful to consider the strongest points of each.
Kabbage comes out on top in the areas of fees and qualification criteria.
Funding Circle comes out on top in the areas of higher loan amounts and more relaxed repayment terms.
It really comes down to what your small business needs out of a loan. If you are looking for a safety net, the line of credit offered by Kabbage may be appealing. If you need a lot of cash now, Funding Circle may be the better fit.