Can I Get a Kabbage Loan if I Have Bad Credit? Updated Guide

Last updated on November 19th, 2024 at 07:35 pm

Getting a business loan can be tough, especially if you have bad credit. Many business owners wonder, Can I get a Kabbage loan if I have bad credit? Kabbage, now owned by American Express, offers business lines of credit, but having a low credit score can affect your chances of approval. In this article, we will explore whether you can still qualify for a Kabbage loan despite having bad credit, how the process works, and what steps you can take to improve your chances.

What Is a Kabbage Loan?

A Kabbage Loan used to be a business line of credit provided by a company called Kabbage, which helped small businesses get quick access to funds. Kabbage offered flexible credit lines from $2,000 to $250,000 that businesses could use when needed. It was popular for providing fast approvals and easy access to loans without a complicated process.

However, in 2020, American Express acquired Kabbage. Now, instead of Kabbage offering the loans, American Express provides similar services through its own Business Line of Credit. All the loans that were originally managed by Kabbage are now handled by American Express.

So, if you’re looking for a loan that was once called a “Kabbage loan,” it’s now officially known as the American Express Business Line of Credit. The process and services have been integrated under American Express, but businesses can still apply for flexible credit lines just like before.

How Does Kabbage Line of Credit Determine Your Eligibility?

Kabbage line of credit or American Express business line of credit looks at several factors to determine whether you qualify for a loan. Your credit score is just one part of the decision. If you have a low credit score, it doesn’t automatically mean you’ll be denied, but it does play a role.

Here’s what American Express considers when you apply:

1. Credit Score: Most approved borrowers have a credit score of at least 640. If your credit score is below this, your chances of approval decrease.
2. Business Revenue: American Express checks how much money your business makes every month. Typically, they expect a minimum of $3,000 in monthly revenue. If your business is doing well financially, this can offset a lower credit score.
3. Business Age: Your business should be at least one year old. This shows that your business is established and capable of handling loans.
4. Bank Account: American Express requires you to link your business’s bank account during the application process. They check your cash flow and how much money you regularly deposit to make sure you can handle the loan payments.

American Express evaluates your overall business health, not just your credit score. So, if your credit score is low but your business is strong, you may still have a chance of getting approved.

Can I Get a Kabbage line of credit If I Have Bad Credit?

If you have bad credit, getting approved for a Kabbage line of credit or American Express business line of credit can be challenging, but it’s not impossible. Bad credit generally means a credit score under 640.

Here’s how having bad credit affects your loan application:

• Lower Approval Chances: While American Express looks at more than just your credit score, a low score will make it harder to get approved. American Express prefers applicants with higher scores because it shows they are more likely to pay back the loan.
• Higher Fees: If you do get approved with bad credit, you may have to pay higher fees. Loans for people with lower credit scores are considered riskier for lenders, so they charge more to cover that risk.
• Limited Loan Amounts: Even if you are approved, American Express might offer you a smaller loan amount than what you applied for. They do this to lower the risk of lending to someone with bad credit.

What Can You Do If You Have Bad Credit?

If your credit score is low, here are some tips to improve your chances of getting a Kabbage loan:

Focus on Your Business Revenue

One of the most important things American Express looks at is how much money your business brings in every month. If your business is making consistent revenue, you might still be able to qualify, even with a bad credit score. Make sure your business is earning at least $3,000 monthly before applying.

Improve Your Credit Score

If possible, work on improving your credit score before applying for a Kabbage loan. You can do this by paying off debts, avoiding late payments, and keeping your credit card balances low. Even small improvements can make a big difference.

Look for Other Lenders

If American Express doesn’t approve your loan, don’t give up. Other lenders specialize in loans for businesses with bad credit. These include companies like Sigma Solutions and Green Doller Loans. You might not get as much money, but they are more likely to approve businesses with low credit scores.

How to Apply for a Kabbage Loan

Applying for a Kabbage loan is straightforward, and most of the process happens online. Here’s how to apply:

• Go to the American Express website: Since Kabbage is now owned by American Express, you’ll start your application on their site.
• Fill out the application: You’ll need to provide details about your business, including your business revenue, bank account information, and time in business.
• Submit documents: Be ready to provide tax returns, bank statements, and other business financial records to prove your business’s health.
• Wait for approval: American Express will review your information. If they approve you, you’ll be able to access your line of credit quickly—sometimes within a few hours.

What Documents Do You Need to Apply for a Kabbage Loan?

When applying for a Kabbage loan, make sure you have all your documents ready to avoid delays in the approval process. Here’s what you’ll need:

• Business checking account information: American Express will check your business’s cash flow to see if you can repay the loan.
• Tax identification number: This is your business’s official ID number.
• Personal guarantee: You will need to guarantee that you’ll repay the loan personally. This means you’ll be responsible for the loan, even if your business can’t pay it back.
• Business financial records: These may include bank statements, tax returns, and other records that show how well your business is doing.

Alternatives to Kabbage for Businesses with Bad Credit

If you can’t get a Kabbage loan due to bad credit, don’t worry—there are other options available for businesses in your situation. Here are a few alternatives:

1. Fundbox: Fundbox offers lines of credit to businesses with lower credit scores. They are known for their flexible requirements and fast funding.
2. BlueVine: BlueVine also provides business loans to companies with bad credit. Their approval process is quicker, and they offer up to $250,000.
3. Lendio: Lendio is a lending marketplace that connects businesses with different lenders, some of which may approve loans for bad credit.

Conclusion

Getting a Kabbage loan with bad credit may be difficult, but it’s not impossible. While a low credit score can lower your approval chances, American Express looks at other factors like business revenue and age. To improve your chances, focus on boosting your business’s financial health and consider improving your credit score. If you’re still unable to qualify, exploring alternative lenders like Fundbox or BlueVine can be helpful.

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Disclaimer: The information in this article is for educational purposes only and should not be considered legal advice. We are not affiliated with Kabbage Inc., American Express, or any other companies mentioned in this article. We have no affiliation with Kabbage, Inc. or American Express. We are a separate financial consulting company.