Alternative lending firm Kabbage is introducing a new loan product that offers customized cash flow solutions to small and medium-sized businesses (SMBs), the payments startup announced on Tuesday (Feb. 4).
The new loan product for Kabbage Payments customers aims to give U.S. small businesses more control over short-term funding needs. The move, which integrates Kabbage Funding with Kabbage Payments, is among the numerous upcoming products that Kabbage is planning as part of its expansion to drive cash flow for SMBs.
"As a former small business owner, I know managing cash flow is a major headache," said Rob Frohwein, CEO of Kabbage. "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."
With custom loans, Kabbage Payments’ SMB customers can choose repayment terms ranging from three and 45 days. When the loan reaches maturity, customers can either pay it in full or allocate a portion of Kabbage Payments toward the balance over the selected period.
“A lot of payments services are built for bookkeepers, not for business leaders,” says Thom Pirone, owner of Stronghold Training, a management consulting firm in Tampa Bay, Florida. “My payment provider kept offering me training to use the platform, but I was too busy. I needed something I could sit down and use instantly and intuitively. Kabbage Payments is perfect for a small business owner who wants to start generating invoices and getting paid today.”
The one-time fee for a custom loan starts at 0.1 percent. Pricing adjustments are variable according to the chosen repayment terms.
New Kabbage Payments customers start with a rate of 2.25 percent per credit card transaction until June 2020. There is no charge to sign up. SMBs can then start sending and settling invoices through Kabbage Payments and receive their money in less time.
Kabbage Payments were introduced in October to offer small businesses support for faster invoice payments and accelerated accounts receivable.