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Kabbage is a financial technology company that provides small businesses and consumers with automatic loans. The company has shifted its focus to Personal Paycheck Protection (PPP) loans to help small businesses that are struggling amid the coronavirus outbreak.
July 2, 2020 update: Previously, the deadline to apply for a PPP loan was at 11:59 p.m. ET on June 30. On July 1, the House of Representatives passed a bill to extend the deadline to August 8. The extension will become official if President Trump signs the bill.
Banks have been slammed with applications for PPP loans since the CARES Act passed, resulting in overwhelmed lenders. In an attempt to slow down applications, banks are placing stricter guidelines on applicants and making the process more difficult. Kabbage is stepping in as a resource for small businesses that are struggling to get PPP loans.
Kabbage has partnered with banks that are technology-friendly and authorized Small Business Administration lenders. Forbes reported that there are multiple partner lenders, including Cross River Bank and Customer's Bank. These partnerships allow borrowers to access PPP loans relatively quickly online.
Kabbage is ideal for small business owners who are eligible for PPP loans but having trouble getting them through their banks.
Not all institutions are approved to offer PPP loans yet, and many banks that are approved are doing so exclusively for existing customers. Others are placing even stricter limitations on who can apply. If these restrictions have hindered your ability to apply for a loan, Kabbage could be a solution.
The platform is also useful for businesses that don't need more than $2 million. Although the CARES Acts allows lenders to provide PPP loans for up to $10 million or 2.5 times their average monthly payroll, Kabbage can only process loans of $2 million or less.
Many banks are so overwhelmed with PPP loan applications that they're limiting applications to existing customers. This makes obtaining a loan difficult if your bank doesn't offer PPP loans — you can't just apply at a different bank.
Your bank may be offering PPP loans, but you're still having trouble applying. For example, even though businesses with fewer than 500 employees are eligible for PPP loans, Wells Fargo has limited its loans to businesses with fewer than 50 employees because it's quickly running out of funds. Bank of America has been accused of favoring applicants who are already lending customers over those who hold personal accounts.
Kabbage is open to all eligible businesses, which gives you a place to turn if your bank either isn't able to help or is making it difficult for you to apply.
When you submit your application online, Kabbage can tell you within minutes whether your business is eligible for a PPP loan and how much money you're approved for.
You can request the funds as soon as you're approved for a loan. A Kabbage representative told Business Insider that Kabbage will transfer the money to your bank account within five business days of your request.
According to the CARES Act, small businesses can receive the lesser of $10 million or 2.5 times their average monthly payroll. However, Kabbage is only able to process loans of $2 million or less.
Because you are limited to one PPP loan, you couldn't receive a loan through Kabbage, then apply to another bank for additional funds. You can apply through Kabbage and through another lender before choosing which loan to accept, though.
Just like any other lender, Kabbage can't guarantee you'll be approved for a loan before that money runs out — something that already happened to the initial $349 billion allotted to the program. Small businesses can apply for PPP loans as late as August 8 if Trump approves the bill to extend the deadline, but you should apply as early as possible to increase your chances of receiving a loan.
Gather the necessary information before starting Kabbage's application process. Kabbage says all applicants should come prepared with their:
And if applicable, their:
The rest of the materials you'll need, which differ depending on whether you're a sole proprietor/self-employed, or have employees/are a nonprofit, are listed on Kabbage's site.
When you visit Kabbage's PPP loans page, click "Apply now" to start the process. After you submit your information, Kabbage will tell you whether your business qualifies for a PPP loan and how much money you can receive. If you choose to accept the loan, you can provide your bank account information and accept the funds via direct deposit.
You won't pay any fees to apply for a PPP loan through Kabbage. The SBA requires that lenders compensate agents like Kabbage, so Kabbage makes its money from its partner banks, not from customers.
Laura Grace Tarpley (she/her) is an expert in mortgage rates, refinance rates, lenders, bank accounts, and borrowing and savings tips for Personal Finance Insider. She worked on Business Insider's "The Road to Home" series, which won a Silver award from the National Associate of Real Estate Editors. She has written about personal finance for over seven years. Before joining the Business Insider team, she was a freelance finance writer for companies like SoFi and The Penny Hoarder, as well as an editor at FluentU.
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