Kabbage vs. Fundera: How this Lender and Lending Marketplace Compare

So you’ve heard good things about Kabbage and Fundera, but you’re not sure which of the two alternative lenders you should go with. After all, they both allow you to apply for business financing on the internet―do their differences really matter that much?

It turns out that yes, Kabbage and Fundera have some big differences that you need to understand. Once you do, you’ll probably know exactly which of the two lenders will work better for you.

We’ll explain those differences, plus everything else you need to know about Kabbage and Fundera.

First things first, we need to talk about how Kabbage and Fundera have dealt with the coronavirus pandemic. It’s completely changed the way they do business―at least for now.

Kabbage and Fundera have both started offering applications for Paycheck Protection Program loans (forgivable SBA loans meant to help businesses cover payroll costs). As of April 16, 2020, funding for the program has run out. But more funding is expected to get approved any day now, so both lenders have continued to accept applications.

In fact, that’s all they’re doing. Fundera and Kabbage have both stopped accepting applications for their usual financing products, and they’re focusing solely on those PPP loans.

Kabbage has even called in existing lines of credit―which means that customers can no longer use their Kabbage lines of credit. As you can guess, many business owners are positively furious about this. Yes, Kabbage is allowed to do that (per the law and its own terms of service), but it’s an unpleasant situation all around.

At any rate, Kabbage and Fundera will keep focusing on PPP loans in the near future. We assume, though, that they’ll return to their normal operations eventually. So for the rest of this article, we’ll discuss how they usually work. Just know that it may be some time before you can apply for their usual financing.

As you’ll soon see, Kabbage and Fundera don’t have much in common. Yes, they both have platforms that let you get business funding―but they go about that in very different ways.

Let’s start with the basics. Kabbage and Fundera have completely different models―and while that might sound like a boring technicality, it actually matters a lot to you.

Both Kabbage and Fundera are technically fintech companies (a fancy way of saying they’re companies that deal with financial technology). So they’re not actually doing any business lending themselves, but they’re working with lenders that do.

Kabbage’s real product is actually its cool application and approval platform. We’ll get into details about the platform in a little bit, but you just need to know that Kabbage isn’t actually extending your loans. Instead, Kabbage partners with banks that like its unique platform.

So when you get approved by Kabbage, you’re technically getting funding from a partner bank (Celtic Bank, specifically). But because you apply, get approved, draw funding, and make payments through Kabbage’s platform, you’ll never notice the difference. It acts just like a normal lender (which is why we’ll call it a lender, even though it’s technically not one).

Because Fundera is a lending marketplace that partners with all sorts of lenders, it offers many more types of loans than Kabbage does.

In fact, Kabbage offers just one funding option: a business line of credit (LOC).

Fortunately, lines of credit are a nice, versatile type of financing. Since you can borrow money up to your credit limit, repay what you borrowed, and then borrow again, they work well for many working capital needs.

Now, Kabbage doesn’t have the biggest lines of credit out there (some Fundera affiliates offer credit lines four times bigger), nor are they the cheapest. Even so, they should still be large enough to cover moderate working capital expenses. Besides, Kabbage’s lines of credit are easier to qualify for than many others (but we’ll address that more in the next section).

But if it’s real versatility you want, Fundera can hook you up with all kinds of business financing.

Fundera has lines of credit, just like Kabbage, but it offers plenty more. For example, it has traditional types of business financing, like long-term loans and SBA loans (loans backed by the U.S. Small Business Administration).

It also has working capital loans for less-than-perfect credit, offering things like merchant cash advances (money in exchange for a percentage of your credit card sales), invoice financing (funding in exchange for unpaid invoices), and short-term loans (term loans with short repayment terms). Fundera even has personal loans that you can use to fund your business.

But remember, Fundera isn’t actually funding any of these loans itself. It’s simply helping you find lenders who will fund you. And interest rates, loan amounts, and repayment terms can vary significantly from lender to lender. And Fundera works with many lenders, both traditional and online:

• BlueVine
• CapitalOne
• Chase
• Fundbox
• Kabbage
• OnDeck
• PayPal
• And many others

In other words, just because Fundera’s loans look like they have lower rates than Kabbage doesn’t mean you’ll actually get those loans. You may get matched with a loan that has a higher rate. Heck, you may even get matched with Kabbage itself.

Your matches will largely depend on your borrower qualifications. So let’s talk about how those work for Kabbage and Fundera.

As you can imagine, Kabbage (with its one type of financing) has pretty straightforward borrower requirements.

And those requirements are relatively low. Kabbage accepts credit scores in the mid-500s (a “poor” credit score, according to FICO)―lower than many online lenders and much lower than pretty much any traditional lenders. Likewise, it has relatively low revenue and time-in-business requirements.

So startups, business owners with poor credit, and businesses still building their revenue may all qualify for Kabbage funding.

Things are a little more complicated over at Fundera’s lending marketplace. Because the different lenders it works with have wildly different qualifications, Fundera doesn’t technically have minimum requirements for would-be borrowers. Instead, it publishes the typical qualifications of successful borrowers.

And as you can see, those qualifications are quite a bit higher than Kabbage’s. For the most part, you’ll need a credit score in the 600s, annual revenue over $100,000, and at least two years in business.

Now, Fundera’s qualifications are still lower than you’d find with many traditional lenders, which typically ask for credit scores in the high 600s, revenue over $250,000, and at least two years in business.

But clearly, Kabbage and Fundera are targeting different businesses. And if you take an honest look at your qualifications, it’s probably clear which of the two lenders will work better for you.

So once you know which one you prefer, how do you actually go about applying and getting funding?

It probably goes without saying that Kabbage’s process is faster and easier. You just answer a handful of simple questions and then connect Kabbage to your business bank account (don’t worry―it will keep your data safe). Then Kabbage’s special algorithm evaluates your information to decide whether or not you get approved for a loan.

Kabbage uses an automated process, so you should get an answer within just a few minutes―no waiting around for hours or days of underwriting.

And after you get approved, you can use PayPal to get your money from Kabbage in mere minutes. You can also have Kabbage deposit money in your bank account or send you a physical Kabbage Card (that works a lot like a debit card).

In other words, you can start your Kabbage funding application and get money inside of an hour, making Kabbage one of the fastest business lenders out there.

Fundera, however, takes much, much longer. Yes, you’ll still start by answering some basic questions about you and your business. But then you’ll have to answer a lot more questions, and you’ll have to upload documents like business banking statements.

Once you’ve got your loan application in, a Fundera loan specialist will contact you to ask any additional questions or get any more documents. Then they’ll start the matchmaking process, which can take anywhere from 24 hours to a week. Your Fundera rep will present you with a list of loan offers. You can then compare them and choose your favorite.

At that point, you’ll work directly with your lender of choice to finish up your loan application and get funded. So depending on how the lender works, that could take anywhere from a few more hours to a few weeks.

All told, Fundera’s funding process will probably take you a few days at minimum. It’s much slower than Kabbage’s quick turnaround. Of course, it’s a trade-off―yes, Fundera takes longer, but it lets you compare loan offers and get the best possible deal.

So what do customers who have actually been through these processes have to say?

Both Kabbage and Fundera have excellent reviews. On Trustpilot, Kabbage has a 4.7 out of 5, while Fundera has an ever-so-slightly higher 4.8 out of 5.1,2

Kabbage reviewers say a lot of good things about the fast application process. They like how quickly they were able to get funding. Some customers, though, complain that Kabbage’s fees are too high and that the repayment schedule is too confusing.

Many Fundera customers have glowing reviews for their loan specialists, and they praise the easiness and speediness of Fundera’s application process. But as you’d expect, some reviewers also complain that they got bad loan matches (or no loan matches). Some business owners also say the process took too long.

Again, both lenders have many, many more positive reviews than negative ones. So while those negative reviews do give you some valuable insight, you should also remember that most borrowers have had really good experiences with Kabbage and Fundera.

Of course, you’re more likely to have a good experience when you choose the lender that better meets your needs. So let’s take a final look at what Kabbage and Fundera do best.

If there’s one thing Kabbage does much better than Fundera, it’s getting money in your hands ASAP.

Kabbage offers a fast, convenient application process. The automated algorithm means you get approved (hopefully) within less than 15 minutes. There’s no waiting around and agonizing and hoping―you simply get an answer.

And if everything goes well, that means you can go ahead and get your money just as quickly. Choose Kabbage’s PayPal funding option, and you’ll have money at your disposal in just a few minutes. Even if you decide to go for the slower direct deposit option, you can have money in one or two business days. Either way, you can get your money and get back to work.

On the off chance that you get denied (and we hope you don’t), Kabbage’s fast process still means you get that answer right away―and then you can quickly regroup and figure out the next-best option. You don’t have to waste valuable time wondering if you need to pursue another route.

Sure, Kabbage funding fees may be higher than we’d like. Even so, Kabbage’s fast approval process, quick funding options, and low borrower requirements make it an ultra-convenient lender that lets you get back to your business in no time.

(If you’d like to take a closer look at Kabbage, check out our Kabbage review.)

Fundera may not offer the fastest financing out there, but it offers one huge advantage: the ability to compare your funding options.

Many of us do comparison shopping in other areas of our lives―from buying canned goods at the grocery store to choosing an apartment to rent―to make sure we’re getting the best deal and the best features. So why should business financing be any different?

Thanks to Fundera’s loan matchmaking, you can compare vital features of different loan offers. Which gives you more money? Which has a cheaper interest rate? Which gives you longer to pay it back? Which has higher fees?

Then you can use the answers to those questions to choose the lender and loan that works best for you, whether you go with the cheapest option or base your decision on some other feature. In other words, you can choose the best possible loan for your small business―not just the easiest to get.

So yes, Fundera’s lending marketplace may take a little more time, but it gives you the chance to get the best value on business financing.

(You can take a look at our Fundera review to get a more detailed take on Fundera.)

Kabbage has higher rates (technically fees) than many other lenders, but it’s much more accessible than other lenders as well. So Kabbage may not actually provide the best value possible―but for many business owners, it may be the best deal of financing they can get. Fortunately, Kabbage has mostly positive reviews, indicating many happy borrowers.

Yes, Kabbage does a hard pull on your credit when you apply. A hard credit check can (negatively) affect your personal credit score, so you should keep that in mind before you apply.

Kabbage looks for a minimum credit score of 540.

Both Kabbage and Fundera will work well for many small-business owners.

If you need fast, convenient funding, Kabbage’s automated approval process offers just that. But if you’d prefer to take your time and compare your loan options, you can do that with Fundera.

Either way, we hope you get the business financing you need.

Want to see even more business lending options? Check out our rankings of the best small-business loans to learn about our favorites.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.