Kabbage to Begin Offering Short-Term Loans for Small Businesses
Kabbage, the online lending company that provides lines of credit to small businesses, recently announced that it will start offering short-term loans with a repayment period of only three days. Beforehand, the lender offered loans with terms of six, twelve, or eighteen months.
According to American Banker, president and co-founder Kathryn Petralia said that “small businesses are interested in shorter repayment terms. Customers can now decide exactly how long they want to keep the money they borrow.”
Many borrowers pay their loans off early, so they can now choose their own repayment terms. Additionally, the “custom” loans come with a one-time fee starting at 0.1 percent.
The short-term loans will be available only to customers of Kabbage Payments, a registered payment service that supplements the company’s online lending business. Customers use Kabbage Payments to send invoices to customers and create a URL to accept credit card payments.
Petralia highlighted the benefit of custom loans over credit cards for small businesses, noting that credit cards cannot be used for all purchases, and many small businesses do not have business credit cards.
“It’s really hard for most small businesses to get access to these kinds of business products,” she said.
Kabbage will continue offering aid for small businesses in other cash-flow challenges. Presently, it has contributed about $9 billion in working capital to roughly 200,000 small businesses.