the pros & cons of small business funding options

Kabbage Kam Webinars#KabbageKam

The Pros & Cons of Small Business Funding Options

Meet the speakers…

Andres ThomasCustomer SuccessKabbage, Inc.Moderator

Jon PariseHead of Customer MarketingKabbage, Inc.


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Visit this page to download: http://kabb.ag/loans101

So…you need money.

In many ways, there has never been a better time to get capitalSo many options:• Traditional bank loans• Online lending • Peer-to-peer lending• Crowdsourcing/funding• Angel investing/lending• SBA loan• Merchant cash advances• Government grants• Credit cards• Friends & family

The right option? Of course, it depends.

Factors to consider

• Application process• Time to apply / decision• Convenience and funds

availability• Loan amount• Cost (APR, origination and

closing fees, etc.)• Repayment options• Customer service

You have an idea

You made it!

You’re ready for the next big step

The right option for you could depend on where you are as a business

You’re wondering:• Is this a good idea? Good enough that people will want to invest?• How much money do I need to get this idea off the ground?• What resources do I need – people, equipment, inventory, etc.?• How much personal debt / risk am I willing to take on?• Am I ready for the unexpected?

You have an idea

You made it!


You could consider… Because… But you should also consider…Personal funds It’s your money. IT’S YOUR MONEY!

Are you willing to put this on the line? Is your spouse equally willing?

Personal Credit Cards You already have one. And points!

High APRs; Can’t pay employees on credit.

Crowdfunding It’s sexy. Can be an inexpensive and low risk path. Get validation for your idea.

Highly competitive and time intensive. All or nothing approach. Transparency. Often treated as income, therefore taxable.

Friends & Family They love you. Do you want your business partner sitting next to you at Thanksgiving?

Angel funding You can get large amounts of money; guidance from the investor.

Are you willing to give up equity? Challenge in finding willing investors.

Phase 1: You have an idea

You’re wondering:• How can I invest in inventory, staff, facilities, etc. in order to build

a solid revenue stream?• How can I pay my vendors on time?• Am I willing to put up a personal guarantee on any debt I take?• How will I pay my employees when cash flow is tight?• How can I generate the highest ROI on any debt I take on?• Am I ready for the unexpected?• How can I have peace of mind while trying to grow the business?

You have an idea

You made it!


You could consider… Because… But you should also consider…Traditional bank loan / line of credit

You can typically get lower rates and a larger sum of money; it’s what you’re used to.

They will speak to you if you can take a larger sum. Speed to funds; Paperwork; Likelihood to get funds; Collateral (personal guarantee + asset required).

Small Business Credit Cards

Perks and points. Annual fees; High APRs; Vendors or employees that don’t accept credit cards.

Online lenders – Line of Credit (Kabbage)

Quick application / decision process; higher likelihood to qualify; ability to take amount needed.

Shorter terms; more ideal for “smaller” investments (<$150k).

Online lenders –traditional loan product

Quicker application process than banks.

Payback options; higher rates on average; lump sum.

Government grant Inexpensive way to get funds (may require matching).

Difficult to obtain; stringent guidelines.

Phase 2: You made it!

You’re wondering:• How much money do I need to make that big investment?

(R&D, new location, new workforce, etc.)• How long will it take me to realize a return?• How quickly do I need those funds?• Do I have a rainy day funds?

You have an idea

You made it!


You could consider… Because… But you should also consider…Traditional bank loan / line of credit

You can typically get lower rates and a larger sum of money; it’s what you’re used to.

They will speak to you if you can take a larger sum. Speed to funds; Paperwork; Likelihood to get funds; Collateral (personal guarantee + asset required).

Online lenders – Line of Credit (Kabbage)

Quick access to capital; control your repayment; ability to take amount needed.

Shorter terms; more ideal for “smaller” investments (<$150k).

Online lenders –traditional loan product

Quicker application process; may qualify for a larger amount.

Payback options; higher rates on average; lump sum.

SBA Loan Long-term, fixed-rate financing for major fixed assets.

Slow approval process (1+ month).

Venture Capital Ability to make large investments and fuel hyper growth; strategic partnerships.

Lengthy due diligence process; giving up equity in your business.

Phase 3: You’re ready for the next big step!

You have an idea

You made it!


So. Many. Options.

So! Many! Options!

Kabbage vs. Other Online LendersKABBAGE vs OTHERS

1 year in business Min requirement Varies

Minutes; instant decision Time to apply Hours; decision in 24 hours

No origination fees Fees Origination fees

No prepayment penalty Repayment Prepayment penalties

Line of credit: Take as much as you want when you want Flexibility Traditional loan product; one lump

sum

We connect to your existing business data sources, no need to fill out extensive information for application

Innovation Traditional credit criteria

Dedicated customer service team; live personalized service

Customer Service

Call center based customer service team, often outsourced

Your Kabbage loan grows as you grow Partner Reapply each time you need funds


Get Small Business Content

Visit this page to download: http://kabb.ag/loans101


From @KabbageInc

Thank you!

the pros & cons of small business funding options

Small Business & Entrepreneurship