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BlueVine vs. Kabbage: Which Business Lender is Better for You?

BlueVine and Kabbage are both alternative online lenders that can provide flexible small business loans in a relatively short amount of time.

Kabbage provides financing in the form of revolving lines of credit. BlueVine also offers lines of credit, in addition to term loans and invoice factoring for small business owners. We’ll break down the details of each lender to help you determine which could be the right fit for your small business.

BlueVine: The details

Based in Redwood City, California, the online lender was founded in 2013. BlueVine has delivered about $2 billion to more than 15,000 small business owners, according to its website. It’s backed by private investors, including Menlo Ventures, SVB Capital, Lightspeed Venture Partners and others.

Line of credit

BlueVine offers lines of credit from $5,000 to $250,000 for eligible borrowers. Opening a line of credit would allow you to borrow the exact amount of money you need as soon you need as you need it. BlueVine doesn’t charge fees to open or maintain a credit line, or prepayment or account closure fees. APRs start at 4.80% and you would only pay interest on what you draw from your credit line. As you make payments, the full line would become available again.

To be eligible for a line of credit, business owners need:

  • FICO score of at least 600
  • Six months in business
  • $100,000 in annual revenue
  • Three months of recent bank statements, or you’ll need to provide access to your bank account

You could be approved in as little as 10 minutes. Funds could be deposited in your bank account in up to three business days, or even as soon as a few hours. Each withdrawal you make from your line of credit would need to be paid back through fixed weekly or monthly payments up to 12 months. BlueVine would automatically debit payments from your bank account.

Term loan

BlueVine’s term loans are also available up to $250,000, with interest rates as low as 4.8% and the same eligibility requirements and time to funding as lines of credit. You would receive your term loan in full as a one-time deposit. To collect payments on term loans, BlueVine would make automatic weekly withdrawals from your bank account.

Invoice factoring

Invoice factoring is available from BlueVine as well and would allow you to get an advance on outstanding invoices. Invoice factoring isn’t technically a loan; rather, BlueVine would purchase your invoices in exchange for immediate cash.

BlueVine offers up to $5 million through invoice factoring and could approve applicants in as little as 24 hours. BlueVine can provide 85% to 90% of your invoice value upfront. When invoices are paid, you would receive the remaining amount, minus a fee that could be as low as 0.25%.

To be eligible for invoice factoring, BlueVine requires:

  • FICO score of at least 530
  • At least three months in business
  • $100,000 in annual revenue
  • Three months of recent bank statements or access to your bank account

Your company must also be business-to-business to qualify for invoice factoring from BlueVine.

The fine print

Secured financing. Funding from BlueVine must be secured with a general lien on the assets of the business. You would also be required to provide a personal guarantee, which would make you personally liable to pay back your debt if the business cannot.

Covering for customers. Business owners who choose invoice factoring are responsible for paying BlueVine if customers don’t pay invoices. If a customer defaults, you would have to self-pay the invoice on BlueVine’s website.

Kabbage: The details

Since 2008, Atlanta-based Kabbage has provided financing to small businesses through its online lending platform. Investors include Japan-based SoftBank Vision Fund, BlueRun Ventures, Mohr Davidow Ventures and others. In addition to lines of credit for small business owners, another arm of the business provides software to banks interested in lending to small businesses.

Kabbage offers a line of credit from $1,000 to $250,000 for qualifying borrowers. You can withdraw as much as you need in increments of $500 or more, and you would pay back the amount you borrow from 6– to 18month.

After you make a withdrawal from your credit line, you would pay back an equal portion of that amount each month for six, 12 or 18 months, plus a monthly fee. Your fee would be between 1.25% - 10.00% of the principal loan amount, depending on your business performance.

If you’re on a six- or 12-month repayment schedule, you would pay a fee each month that you have a balance. If you’re assigned an 18-month term, your fees would accrue in full at the time you make the withdrawal and you would pay an equal amount each month regardless of any reduction of your balance.

Kabbage’s eligibility requirements include:

  • One year in business
  • $50,000 in annual revenue, or $4,200 in monthly revenue for the past three months
  • No minimum credit score requirement

Kabbage automatically withdraws payments from your bank account, though you can make manual payments anytime. When you draw from your line of credit, Kabbage considers that amount an individual term loan with its own loan agreement and repayment schedule. If you’ve made multiple withdrawals from your credit line, Kabbage would bundle all of your outstanding balances and charge one monthly payment.

The fine print

Unsecured funding. Kabbage lines of credit are unsecured financing, meaning you don’t have to provide collateral to receive funds. However, a general lien may be placed on your business assets in certain instances, which would secure the loan if your business defaults.

Speed not guaranteed. Although Kabbage advertises approval in 10 minutes, the timing would depend on the size of your line of credit. Kabbage could approve lines up to $200,000 in minutes if the company is able to automatically verify your bank account and business data. But lines that exceed $200,000 require a manual review, and it could take several days for Kabbage to deposit funds in your account.

Digital banking partnership. Kabbage recently partnered with Azlo, an online bank that works with small businesses. Through the program — known as Mission Street Capital — Azlo customers can apply for Kabbage financing. Azlo serves underbanked businesses, such as business owners with thin credit profiles, gig-economy businesses and fast-growing small businesses.

Kabbage Card available. Kabbage offers a credit card that allows borrowers to draw from their credit line with a simple swipe, rather than making a transaction through the Kabbage portal. The Kabbage Card is only available to existing customers, and there are no extra costs or fees to use the card.

BlueVine vs. Kabbage: Making the right choice for your business

BlueVine and Kabbage have many similarities. For instance, Utah-based Celtic Bank issues Kabbage’s line of credit, as well as BlueVine’s line of credit and term loan.

Both also advertise 10-minute approval times and a maximum amount of $250,000 for lines of credit, plus the application process takes place online for both companies. However, submitting a BlueVine application does not include a hard credit pull and would not affect your credit score, while Kabbage would pull your credit report.

You could end up paying for such speedy approvals through higher interest rates — borrowing through an online lender is typically going to be more expensive than small business lending at a traditional bank, but approval is generally slower and more difficult to get.

When choosing between Kabbage and BlueVine to finance your business, consider these additional factors:

Available products: Kabbage only offers a line of credit, one that maxes out at $250,000. You can draw $500 or more from your credit line at any time and use your funds to cover any business expense. BlueVine’s line of credit also caps at $250,000; you can make similar withdrawals of $500 or more, though your first draw also allows you access to $5,000 or more. But BlueVine also offers additional products — term loans up to $250,000 and invoice factoring up to $5 million — if you prefer to receive a lump sum or need a larger amount of money.

Eligibility factors: The requirements vary slightly for BlueVine and Kabbage applicants, and you may find one lender more favorable for your situation than the other. For instance, if you’ve been in business for a full year, but have yet to exceed five figures in annual revenue, then Kabbage may be the best choice. Alternately, if you’ve been operating for just six months but you’re already making more than $100,000 in annual revenue and you have a strong credit profile, then you may want to choose BlueVine.

Cost of financing: Both BlueVine and Kabbage review your business performance and personal credit history to determine your rate. BlueVine advertises interest rates as low as 4.8%, while Kabbage’s fees range from 1.5% to 10%. However, your rate may be higher based on your profile, and you could see an additional charge of 1.5% each month from outside partners.

Here’s a quick look at how a line of credit from BlueVine and Kabbage compares:

Line of Credit BlueVine Kabbage
Maximum amount $250,000 $250,000
Repayment terms Up to 12 months 6 to 18 months
Interest rate As low as 4.80% 1.25% - 10.00% monthly fee
FICO score 600+ None
Revenue $100,000 annually $50,000 annually, or $4,200 monthly
Time in business 6 months 1 year

The bottom line

BlueVine and Kabbage offer suitable financing options for business owners who need funding fast. Opening a line of credit with either lender would give you the flexibility to draw funds whenever you need.

If you’re looking for options beyond a line of credit, BlueVine would be the better choice. You could take out a term loan and receive up to $250,000 all at once. Or, you could sell your invoices to BlueVine in exchange for up to $5 million in funding. BlueVine’s invoice factoring also has more lenient eligibility requirements, which could make it an attractive option if you have a low credit score.

The cost of financing from BlueVine and Kabbage would depend on your business performance. You may not know your exact fee or interest rate until you submit an application.

Before signing a loan agreement with either company, understand what is expected of you. Make sure you can afford the total cost of financing and keep up with your repayment schedule. Take the time to shop around to find the right offer for your small business.

The rates and fees mentioned in this article are accurate as of the date of publishing.

 

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