Kabbage Review: Paycheck Protection Program Small Business Loans
Kabbage is an online lender that was originally focused on offering small businesses short-term lines of credit. But with the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the company pivoted in April to processing Paycheck Protection Program (PPP) loans through the U.S. Small Business Administration (SBA). This review focuses on Kabbage as a PPP loan provider.
Kabbage is offering PPP loans directly as an approved SBA lender and indirectly via additional approved lenders, which enables the company to process loan applications for up to $2 million as part of the PPP. If you are approved for a PPP loan via Kabbage’s application portal, this makes Kabbage’s partner bank your lender. You can also consider working with other other nonbank lenders providing PPP loans.
Kabbage PPP Loan Details
Loan amounts: Up to 2.5 times the business’ average monthly payroll during the year preceding your PPP application, up to $2 million. Note that this is the maximum loan amount Kabbage will process, but other PPP lenders can process loans up to $10 million.
Loan terms available: Loans that meet the forgiveness criteria don’t need to be repaid. Otherwise, PPP loans must be paid back over a two-year term with a 1% fixed interest rate.
APR range: Up to 1%, depending on forgiveness eligibility
Fees: None
Eligibility requirements: Eligible businesses include small businesses and nonprofits with up to 500 employees, hospitality and food service entities with fewer than 500 employees per location, sole proprietors, independent contractors and self-employed individuals
Kabbage PPP Basics
Before the COVID-19 crisis, Kabbage was focused on offering short-term small business lines of credit of up to $250,000, primarily for those with less-than-stellar credit who needed money fast.
With its focus now on PPP loans, Kabbage says it can process PPP applications for loans up to $2 million. PPP loans are available in amounts of up to $10 million, so if you’re seeking more money than the amount Kabbage can provide, apply elsewhere. You can only receive one PPP loan, per SBA rules.
Kabbage Eligibility Requirements
The PPP eligibility rules are the same across all lenders. The U.S. Department of the Treasury says that small businesses, nonprofits, veterans’ organizations and tribal business concerns with 500 or fewer employees can apply. So can sole proprietorships, self-employed individuals and independent contractors. Businesses in certain industries with more than 500 employees are eligible if they meet the SBA’s employee-based size standards for those industries.
Kabbage Repayment Options
The rules of repayment and forgiveness are standard for all PPP loans. To get full loan forgiveness, at least 75% of the loan proceeds must be used to cover payroll costs for eligible employees over the eight-week period after the loan is made. Employee counts and employee compensation levels must stay the same. Covered payroll costs are limited to $100,000 per year for each employee.
Businesses who don’t use the loan proceeds as required will have their loan payments deferred for six months. The loan will accrue interest at a rate of 1%, including during the six-month deferment period. Loans must be repaid within two years, and there’s no penalty for prepayment.
How to Apply For a Kabbage PPP Loan
To apply for a PPP loan through Kabbage, complete the following steps:
1. Fill out the online application, which asks for information about you, your co-owners and the business itself, including payroll and how you’ll use the loan.
2. Gather and submit the correct documentation for your business.
If your business is a corporation, professional corporation, general partnership, LLC or nonprofit: Provide a color copy of government-issued ID; organizational documents; payroll statements if your business is seasonal; 2019 IRS Form W-3; 2019 IRS Form 940; W-2s for employees living abroad; W-2s for employees making over $100,000; and your most recent statement if you have received or been approved for an Economic Injury Disaster Loan.
If you are a sole proprietor, independent contractor, self-employed individual or single member LLC with employees: Provide a color copy of your government-issued ID; 2019 1040 Schedule C; 2019 IRS Form W-3; 2019 IRS Form 940; W-2s for any employees earning more than $100,000; and a payroll statement showing wages paid as of Feb. 15, 2020.
If you are a sole proprietor, independent contractor, self-employed individual or single member LLC with no employees: Provide a color copy of your government-issued ID; 2019 1040 Schedule C; proof of self-employment, including a 1099-MISC for independent contractors; documentation showing you were operating as of Feb. 15, 2020.
3. Kabbage will then review your information, and if everything is in order, the company will submit it to the SBA. If you’re approved, you’ll be asked to sign loan documents, and your funds will be deposited into the bank account that you included on the application.
How to Contact Kabbage
Call: 888-986-8263 Monday to Friday, 8 a.m. to 9 p.m. EST
Email: support@kabbage.com or fill out this form
Postal mail: 925B Peachtree Street NE, Suite 1688, Atlanta, GA 30309