Despite the stabilization of debt markets, banks are increasingly reluctant to lend to small businesses. Banks have less capital and less of an appetite to lend to small borrowers. Many of these businesses are as creditworthy as they were in 2008, but they just cannot meet the stringent conservative standards for present-day bank loans.
Below, we highlight three innovative firms that are lending to such businesses.
What makes Kabbage tick is that it does not rely completely on traditional credit models but rather uses real-time data while deciding whether to advance capital to a seller. Kabbage offers advances ranging from $500 to $40,000. Depending on the length of the loan and other factors, the company charges a 2% to 18% fee.
Customers from 41 states have taken advances through the Kabbage application. The rapid adoption rate suggests the strong need for funding among small businesses, and Kabbage says its platform seeks to fulfill this need. Enabling access to funds from mobile devices is the next logical step in making it easier for small businesses to get instant access to capital said Kabbage CEO Rob Frohwein. Kabbage has provided 60,000 ...
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