Kabbage is an Atlanta-based startup that lends capital to online merchants and sellers within marketplaces like Amazon and eBay that are not able to receive financing from traditional banks. Kabbage was recently able to raise $17M in Series B funding, which brought its total funding up to $24M.
Kabbage makes money off of fees charged to merchants for the working capital. Fees depend on how long the online merchant keeps the capital (6 month maximum) and the customer’s repayment risk. Rates range from 6 percent to 16 percent of the original advance amount. Kabbage currently supports merchants operating on eBay, Amazon and Yahoo’s platform and plans to add support for sellers on Facebook, Etsy, Shopify, and Sears. Currently, there are ‘thousands’ of merchants using Kabbage and [founder Mark] Gorlin expects for the total merchandise volume of Kabbage sellers to reach $3 billion in the next year.
Kabbage uses PayPal’s Adaptive Payments API to make cash advances available to online marketplace sellers as quickly as 10 minutes after the request. There have been comparisons between Kabbage’s ability to bring loans to those who previously could not receive them and the services provided by Square (bringing payment card acceptance to small merchants)and Green-Dot (bringing payment cards to the unbanked).
