Would a cash injection help grow your business? What if you could order a few thousand dollars worth of new inventory to sell? How much would it help if you could hire a staffer to help? Could $1000 towards advertising transform your business?
Maybe Kabbage can help.
Kabbage provides cash advances to online retailers to help them grow their businesses. Their service is available to sellers on eBay, Amazon, Yahoo, Shopify and Etsy. Previously, Kabbage was only available to sellers in the US, but as of last month, Kabbage is now also available in the UK!
Signing up to Kabbage takes just a couple of minutes and you can get money transferred into your PayPal account instantly, or within 3-5 days if you are using a regular bank account. The money is then yours to use as you please to grow your business. Most people spend the money on wholesale product sourcing, but you can use your cash advance from Kabbage to hire staff or advertise your business.
To get a Kabbage loan, you need to make at least US$1000 worth of sales each month. The sales don't all have to come from one store, but you will need to prove your sales totals using Kabbage's secure login.
Kabbage has a very simple repayment system. You get the cash advance for 6 months, and after that 6 month period, you need to have repaid your advance in full. During the 6 month loan period, you pay one sixth (or 16%) of the loan of each month. On top of the repayments of what you borrowed, you will pay a fee of 2-7% of the advance as a fee. The exact % depends on how much you borrow. The payments are taken directly from your PayPal or bank account so you have to make sure you have the cash available to make the repayments starting in month one.
Here's a graphic from Kabbage.com that explains how repayments work:
With this in mind, I would suggest having the cash available to cover the cost of at least the first month's minimum. Why? Let's say you borrow $10,000 to order some stock from a wholesaler. Given how long it can take to order stock, get stock deliverd and listed online, there could be a couple of weeks in lead time before you start making money off the loan. You'll need around $1600 to repay the first month of your loan, but you might not yet have the cash coming in.
If you have cash ready to cover your first month, it will eliminate pressure to sell stock off quickly.
If you want to read some success stories on the Kabbage website, you can do so here. Here are some unbiased words about Kabbage that I found on the web:
"I just signed up a few minutes ago with Kabbage and I'm very impressed with how professional this company is... They have very good reviews and for someone like me that doesn't have good credit and can use a little extra money to buy supplies...this was perfect. They started me out with more than I thought I was going to get... And the more I'm with Kabbage the more advances I can get. This is great!"
- Etsy seller, Dee
"Kabbage may not be the cheapest money out there but they are competitive to the other sources MOST small biz resort to. Let's face it, banks are not interested in our business. I give Kabbage credit for the growth of my business . Being able to access money when I need it makes me able to get better deals. Just remember it's a short term (6 month) process and plan accodrdingly."
- eBay seller, Katskloset
I actually found a whole lot of fantastic reviews about Kabbage and to be honest, I found it hard to find a bad review about them. I looked around online and tried to find some negative feedback, but I couldn't find anything (other than the comment below which didn't actually come from a Kabbage customer, it came from a friend of a Kabbage customer). If you stumble across anything, leave me a comment!
As with all loans or cash advances, you need to make sure that you have afford to service it. As one Etsy seller mentioned, Kabbage don't fool around when it comes time to get their money back from you.
"It's true they will give you money, but what ever you do don't become late on the payments or they will raid your pay pal account like a thief in the night. This happened to a friend of mine, when he couldn't pay loan back on time, due to slow sales and it became a nightmare!"
Kabbage aren't in the wrong for recovering their money. They're a business, not a charity, after all! Just make sure of two things when you consider getting a Kabbage cash advance:
1. You fully understand your obligations to service the advance and repay it within the 6 month period.
2. Only use the cash advance to grow your business: Don't waste the money on a product that you haven't done market research on. If you buy dud products that you can't sell, you could run into problems repaying the cash advance.
Cash advances aren't right for every business. I highly recommend that you do your due diligence before you take on a cash advance or a loan from anyone. Make sure you crunch the numbers and make sure any loan or advance you get will actually be profitable for your business. Always read the fine print and if you can, get a trusted friend or family member to take a look over it as well.
With all that said, if you are looking to grow your eBay business, I highly reccommend that you give Kabbage a try. It's free to sign up and see how much you can borrow and how much the cash advance will cost you.
Recommended reading: Ecommerce Breakdown: Amazon Webstore vs. BigCommerce vs. Shopify