US lender Kabbage expands into short-term working capital loans

Retailers can easily borrow, but only if they use Kabbage’s credit card processing.

Alternate business lender Kabbage this morning unveiled its expansion into custom working capital loans.

Kabbage’s new loans come just months after the American lender launched its own payments infrastructure to help customers accept online card payments.

Its new working capital loans will be exclusively for those businesses using Kabbage Payments, who can now borrow for between three and 45 days with a one-time fee starting from 0.1 per cent.

Repayments are also made through the card processing system, with retailers able to pick a percentage of revenue that should go towards repaying their loans.

"As a former small business owner, I know managing cash flow is a major headache," said Kabbage CEO Rob Frohwein on the launch. 

"We designed our custom loan product to recognize these inherent challenges and provide our customers with even more flexible funding to better manage their businesses." 

The move also pits the American lender against rivals like Amazon, PayPal and Square, all of which use their retailer customers’ sales data to price and inform their working capital lending.

Kabbage’s custom working capital lending sits alongside the lender’s existing term loans, which span 6-18 months.