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- Fintech company Kabbage has partnered with a bank that is an SBA-approved lender to provide automatic Paycheck Protection Program (PPP) loans to small businesses.
- You don’t have to be an existing Kabbage customer to apply, which makes Kabbage a resource if you’re struggling to be approved for a PPP loan by your bank.
- Even though small businesses can receive PPP loans of up to $10 million, Kabbage is only processing loans of up to $2 million.
- When you apply online, Kabbage will tell you whether your business is eligible for a PPP loan and how much you can receive.
- Click here to apply for federal relief through the Paycheck Protection Program »
Kabbage is a financial technology company that provides small businesses and consumers with automatic loans. The company has shifted its focus to Personal Paycheck Protection (PPP) loans to help small businesses that are struggling amid the coronavirus outbreak.
Originally, the CARES Act allotted $349 billion for PPP loans to help businesses cover costs such as mortgage, rent, utilities, and employee payroll for up to eight weeks after receiving the loan. Funds ran out in a matter of weeks. On Thursday, the Senate and the House signed off on a second round of funds as part of a $484 billion coronavirus relief package, which President Trump says he intends to approve; $320 billion is designated for the Paycheck Protection Program.
Banks have been slammed with applications for PPP loans since the CARES Act passed, resulting in overwhelmed lenders. In an attempt to slow down applications, banks are placing stricter guidelines on applicants and making the process more difficult. Kabbage is stepping in as a resource for small businesses that are struggling to get PPP loans.
Kabbage has partnered with a bank that is technology-friendly and an authorized Small Business Administration lender. The name of the bank has not yet been released (a press release indicated it’s forthcoming), but this partnership allows borrowers to access PPP loans relatively quickly online.
Should you use Kabbage?
Kabbage is ideal for small business owners who are eligible for PPP loans but having trouble getting them through their banks.
Not all institutions are approved to offer PPP loans yet, and many banks that are approved are doing so exclusively for existing customers. Others are placing even stricter limitations on who can apply. If these restrictions have hindered your ability to apply for a loan, Kabbage could be a solution.
The platform is also useful for businesses that don’t need more than $2 million. Although the CARES Acts allows lenders to provide PPP loans for up to $10 million or 2.5 times their average monthly payroll, Kabbage can only process loans of $2 million or less.
The pros of applying for a PPP loan through Kabbage
You can apply even if you aren’t a current Kabbage customer
Many banks are so overwhelmed with PPP loan applications that they’re limiting applications to existing customers. This makes obtaining a loan difficult if your bank doesn’t offer PPP loans — you can’t just apply at a different bank.
Your bank may be offering PPP loans, but you’re still having trouble applying. For example, even though businesses with fewer than 500 employees are eligible for PPP loans, Wells Fargo has limited its loans to businesses with fewer than 50 employees because it’s quickly running out of funds. Bank of America has been accused of favoring applicants who are already lending customers over those who hold personal accounts.
Kabbage is open to all eligible businesses, which gives you a place to turn if your bank either isn’t able to help or is making it difficult for you to apply.
You can be approved for a PPP loan quickly
When you submit your application online, Kabbage can tell you within minutes whether your business is eligible for a PPP loan and how much money you’re approved for.
You can request the funds as soon as you’re approved for a loan. A Kabbage representative told Business Insider that Kabbage will transfer the money to your bank account within five business days of your request.
The cons of applying for a PPP loan through Kabbage
You can only receive up to $2 million
According to the CARES Act, small businesses can receive the lesser of $10 million or 2.5 times their average monthly payroll. However, Kabbage is only able to process loans of $2 million or less.
Because you are limited to one PPP loan, you couldn’t receive a loan through Kabbage, then apply to another bank for additional funds. You can apply through Kabbage and through another lender before choosing which loan to accept, though.
It’s still possible money will run out
Just like any other lender, Kabbage can’t guarantee you’ll be approved for a loan before that money runs out — something that already happened to the initial $349 billion allotted to the program. Small businesses can apply for PPP loans as late as June 30, but you should apply as early as possible to increase your chances of receiving a loan.
How to use Kabbage to receive a PPP loan
Gather the necessary information before starting Kabbage’s application process. Kabbage says all applicants should come prepared with their:
- Business start date
- Government issued ID (front and back)
- Monthly Payroll Report
- Bank account and routing number
And if applicable, their:
- Medical Insurance payment verification
- Documentation confirming retirement benefits
- Economic Injury Disaster Loan (EIDL) statement
The rest of the materials you’ll need, which differ depending on whether you’re a sole proprietor/self-employed, or have employees/are a nonprofit, are listed on Kabbage’s site.
When you visit Kabbage’s PPP loans page, click “Apply now” to start the process. After you submit your information, Kabbage will tell you whether your business qualifies for a PPP loan and how much money you can receive. If you choose to accept the loan, you can provide your bank account information and accept the funds via direct deposit.
- Read more on managing your money in this tumultuous time:
- 3 options for people struggling to pay their mortgage during the global health crisis
- 4 reasons to get disability insurance, even if you don’t think you need it
- If you’ve been financially impacted by the coronavirus, you may be able to pause payments on these 8 bills
- How to get a stimulus check from the US government, which could pay up to $1,200 if you qualify
- In response to the coronavirus, credit card issuers like Amex and Capital One are letting customers skip payments without interest and more