National Funding vs Kabbage: Which lender offers the best small business loan?

Published September 30, 2020 by WC Team

Every small business needs a little extra help from time to time, whether it’s because they're struggling with cash flow issues or they’re ready to expand and need some additional capital. Applying for a business loan through a traditional bank can take a long time, often in excess of 90 days, and almost 50% of all loan applications from small businesses are turned down.

Fortunately, alternative online lenders can fill the gap and provide the business funding you need. Here, we’ll compare National Funding and Kabbage small business loans to see which is the best choice for your small business.


Table of Contents

National Funding Small Business Loans: Loan Amounts, Terms and Rates
Kabbage Small Business Loans: Loan Amounts, Terms & Rates
Qualification Requirements
Application and Underwriting Process
Post-Funding
Takeaway
Reviews
Key Differences/Short Summary
Net Takeaway

National Funding Small Business Loans: Loan Amounts, Terms and Rates


National Funding offers flexible short-term loans for any business purpose, plus equipment financing loans and merchant cash advance.

Loan amounts are:

  • Unsecured business loans for between $5,000 and $500,000
  • Equipment leasing and financing loans up to $150,000
  • Merchant cash advance up to $250,000

National Funding prides itself on its personalized funding solutions, so your loan term and fees depend on your business revenue and credit score. You’ll discover your term and fees when you talk to your personal loan specialist, but loan terms range from 6 to 15 months, and the flat loan fee is 17% to 36% of the loan amount, instead of paying a monthly interest rate.

Kabbage Small Business Loans: Loan Amounts, Terms & Rates

Before we dive into Kabbage funding for small businesses, it’s important to note that when COVID-19 hit, Kabbage put all its lending on pause and focused only on helping small businesses expedite PPP loans. It was recently acquired by American Express, which might be about to stop Kabbage loans altogether so that it can focus on the cash flow management tools.

For the moment, then, Kabbage funding includes just one product: a business line of credit of between $2,000 and $250,000. The way it works is that Kabbage will approve you to borrow a certain amount, and then you can withdraw the funds whenever you like. It’s similar to a credit card.

Each withdrawal has to be in increments of $500, and you only pay fees for the amount you’ve withdrawn, not the amount you’ve been approved to borrow. Kabbage doesn’t charge a typical APR on your loan; instead it charges a monthly fee of between 1.25% and 10%, depending on how your business is performing.

Takeaway

National Funding has a wide range of small business loan options suitable for almost all credit types or funding needs., They’re also willing to fund much larger loans. If you need a large business loan, it’s ideal. Kabbage funding gives you the flexibility to borrow as much as you need, whenever you need it, but the maximum amount is much less than you could get through National Funding.

Qualification Requirements

Every lender has different conditions for providing funding. You want to know if you can get the funds you need in your specific circumstances.

National Funding Lending Requirements

For most loans through National Funding, you need to have been in business for at least one year, have a business bank account, a personal credit score of 550 or more, and minimum annual revenue of $10,000. Your average bank balance must be at least $1,500, and ideally $3,500 or more. National Funding is sensitive to lending to small businesses that have a history of excessive non-sufficient funds (NSFs), so if your business consistently runs out of cash throughout the month, they may not be the best lender. Instead take a look at the lenders listed in our recent article on businesses with challenged credit.

While National Funding provides bad credit loans too, they won’t give you a loan if you’ve had a bankruptcy in the past year, or have more than five non-sufficient funds (NSF) notices on your last three months of bank statements. You’ll need to provide a personal guarantee for your loan, but there’s no collateral required.

While it’s quick and easy to secure a small business loan through National Funding, if you’re looking for an equipment financing loan (often referred to as an equipment lease) you’ll likely find a different process, where underwriting is more in-depth and an average funding time of approximately 30-45 days. Equipment financing loans have slightly different requirements; you’ll need to show only six months in business, but you’ll also have to have a FICO score of over 650 , comparable credit reference (example of your business borrowing from another bank or financial institution), have no history of suits, liens or judgments, a mortgage or auto loan history and no late payments on any financial obligation personal or business-related.

National Funding lends to most industries, but its prohibited industries list includes:

  • Mining
  • Oil and gas
  • Car dealerships
  • Sports clubs
  • Legal services
  • Art galleries

Kabbage Lending Requirements

Like National Funding, Kabbage requires your business to have been operating for at least one year, but the minimum revenue requirement is much lower — you only need to show annual revenue of $50,000, or a monthly gross revenue of at least $4,200 for the past three months.

You also have to provide a personal guarantee in your loan agreement.

Kabbage loans aren’t available to business that operate in these industries:

  • Marijuana and CBD
  • Firearms
  • Gambling
  • Financial institutions or lending organizations
  • Non-profit organizations

Takeaway

Business owners with poor business credit and low personal credit will find it a lot easier to qualify for a loan with National Funding, as long as their business meets some bare minimum revenue targets and doesn’t have a history of non-sufficient funds (NSF) in their business bank account. . However, if you have strong credit but low gross revenue, you’ll find it easier to qualify for Kabbage funding.

Application and Underwriting Process

When you need a business loan, you don’t want to have to fill out reams of paperwork or wait days for a reply. You want a fast and simple application process.

National Funding

Applying for a loan with National Funding is easy. You complete a simple online application form, and then wait for your personal loan specialist to contact you and ask you more questions about your business and your funding needs.

It takes up to three days for National Funding to review your bank and business documents, but if you have everything ready to go, you can complete the process within one business day. Once your application is approved, funds are deposited in your bank account via ACH or Wire (additional fee may apply) in as little as 24 hours.

You’ll need to provide three months of bank statements, unless you’re applying for a merchant cash advance. In that case, you’ll need to show six months of credit card statement, and monthly credit card transactions of over $3,000. National Funding also runs a personal and business credit check.

Kabbage

Kabbage connects with your bank account to crawl your financial history for the information it needs. Don’t worry, the process is highly secure and Kabbage won’t be able to change anything in your accounts. ,

For loans of up to $200,000, the process is automated and you can get approval within minutes. If you’re seeking a loan of over $200,000, you’ll need to wait a little longer for a manual review, which can take up to several days.

Kabbage also asks for some basic information about your business, and runs a personal and business credit check.

Once approved, funds are available immediately.. If you’re managing your loan through a PayPal account, it only takes a few minutes before you can withdraw funds. Kabbage also offers a Kabbage Card, which functions like a credit card. You can withdraw funds from your Kabbage card immediately too. Loans deposited into your business checking account are processed in as little as three days.

Takeaway

It’s really easy to apply for a loan from both National Funding and Kabbage, and the process is fast with both lenders. That said, Kabbage’s automated process means that you could start withdrawing loan funds within minutes, which is quicker than National Funding.

Post-Funding

Getting a business loan is only half the process. You also care about how much you’ll have to pay in fees, whether there are any early prepayment penalties, and what happens if you need to borrow more or renew your business loan.

National Funding

With National Funding, you’ll repay your loan in automated daily or weekly repayments over a loan term of six to 15 months. When it comes to merchant cash advances, you’ll repay the loan through automated deductions of 10% off every transaction.

If you want to check up on the progress of your loan you’ll have to call the customer support center, because there is no iOs or Android application, nor does National Funding have an online loan dashboard.

Instead of charging monthly interest rates, National Funding charges a flat fee of 17%-36% of your loan amount, and you’ll repay that fee along with the principal in your daily or weekly payments. You’ll also have to pay an origination fee of 2% for a business loan, but there are no other hidden fees. One of the best things about National Funding is that not only are there no prepayment fees, you’ll also save 7% (6% for equipment financing) off your total remaining balance when you repay the entire loan within 100 calendar days.

It’s good to know that you can use your loan from National Funding for any business purpose you like, including covering payroll, land purchase, working capital costs, and more.

Kabbage

Because Kabbage offers a line of credit, you’ll only repay the amount that you withdraw, not the amount that you’ve been approved to borrow. Kabbage offers a flexible repayment schedule of six, 12, or 18 months on each withdrawal.

Every month, you’ll repay part of the loan, plus a monthly fee of between 1.25% and 10%, through automatic payments. Apart from this fee, there are no other costs for Kabbage loans, and no prepayment penalties. You will have to pay a late fee of $10— $100 on overdue payments, depending on the outstanding balance amount, but you’ll get a four-day grace period before the fee is applied.

Kabbage customer service is primarily online. It has an online loan calculator that helps you keep track of how much you’ve repaid and how much is left to pay, as well as the amount of funds that remain for you to withdraw. You can make withdrawals as often as you like, up until your maximum credit limit, and once you’ve repaid a withdrawal you can take out more funds again in the future.

Kabbage doesn’t place any restrictions on what you do with your loan. It’s yours to use however you like for your business. You can make repayments through your bank checking account or a PayPal account. Payments made through your bank take 1-3 business days to process and up to seven days to be reflected in your available funds, while PayPal payments are processed immediately.

Takeaway

The fees are high for loans through National Funding, and repaying loans on a daily or weekly basis instead of monthly could cause cash flow problems. But the generous discount for early prepayment is very appealing for anyone who expects to be able to pay off their loan quickly. In contrast, Kabbage is a much lower-cost lender, and makes it easy to extend your loan without having to reapply.

Reviews

The Working Capital team has prepared in-depth reviews of both Kabbage and National Funding with additional information.

You can find our National Funding review here. Our Kabbage review is available here.

Key Differences/Short Summary

National Funding and Kabbage offer very different business loan products. With National Funding you’ll get a short-term small business loan. Kabbage offers a business line of credit that allows you to make withdrawals whenever you need, up to your maximum credit amount. But Kabbage loans might be about to disappear. Both of them have fast application processes and allow you to use your loan amount for any business purpose.

Net Takeaway

If you have poor business or personal credit, or you need a larger loan amount up to $200,000, National Funding is your better option when compared with Kabbage. It’s fast to qualify and covers almost every industry. However, if you’re looking for the quickest possible lending process and lower fees, Kabbage is a better option.

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22 Comments

Rosalie Cook

2 months ago

In my opinion, both lenders aren't an ideal choice. If you're looking for small business financing or loans of what not, why not just rely on your bank. I got financing for my dental office through US Bank. It's funny though, if you Google "dental practice loan" both National Funding and Kabbage will pop up. So, what does that mean? That they're good at marketing? Certainly, they're not the best choice for dental practice loans. If either National Funding or Kabbage was dedicated to my field, wouldn't I see them at shows like Dentimax?

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Leticia Castaneda

2 months ago

Not sure why you say that. Both fill in a niche.

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Jody Hanson

2 months ago

Both lenders do fill a niche. I'm not a dentist, but I've done an merchant cash advance tthrough National Funding. It was literally years ago. I took it once and when I got a phone call from their sales department, I felt like they were pressuring me into refinancing the loan. In the end, I just decided to not take on any more debt and just bootstrap my operation. I've never worked with Kabbage before, though I've seen their advertisements literallly everywhere: email, Google, FB and Instagram and even satellite radio. I'm big on reviews, maybe that makes me part of the old guard, but whatever. It's in my DNA. Before I took my small business loan from National Funding, I read their reviews. This was way before Trust Pilot and the like, so I only could rely on Google. Was it a good decision? I don't really have regrets. IMO, making the wrong decision at the right time is still better than making no decision at all. From what I read about the Kabbage reviews, they did fill a niche. The provide quick funding and large amounts. However, I think they probably got a bit over their skis and tried to buy the market. What these lenders will never understand is that money is a commodity and there's no loyality to the lender itself. As business owners, we're all on our own and as such have to penny pinch to make sure we can live to fight another day. National Funding reviews and Kabbage reviews tell a similar tale. Fast turn around, high rates. So, yeah, they fill a niche. When you find the right opportunity, you have to seize the day. But as the old adage says, caveat emptor.

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Joesph Henderson

2 months ago

This article wasn't all that helpful. It seemed more of a sponsored post than actual factual data that would inform a decision. Where can I find more in-depth reviews on National Funding and Kabbage? Are they really that different?

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Elvis Mcintosh

2 months ago

At the bottom of the article there's a link to read the individual reviews. I think it says, "read our National Funding review here, and "read our Kabbage review here."

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Ryan Chung

2 months ago

I think the comparison of National Funding versus Kabbage is irrelevent. Kabbage was acquired by American Express. Here's a link to a Tech Crunch article from August 17, 2020. You'll notice that Kabbage was acquired but AMEX makes it quite clear that they have no plans to continue lending using the Kabbage name. It seems that AMEX only motivation to acquire them was purely a technology play. So, how can you compare a lender like National Funding that does have great reviews to a lender that arguably doesn't exist?

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Jeramy Odom

2 months ago

Ryan, you make a good point. However, two quick points of clarification. National Funding changed their name years ago. They were called Five Points Capital. Still out of Suthern California. Back then they primarily focused on equipment leasing. In fact, if you know much about equipment financing, you may remember how they got into hot water with their customers. Apparenlty, they really stook it to their customers with the fair market value clause at the end of the term. This coincided with the Great Recession and caused a ton of small business owners a lot of pain. IMHO, pain that should have or could have been avoided. These leases were probably all full-payout leases, meaning that the business owner paid the full amount of the invoices plus financing charges and then at the end if they wanted to keep the asset were hit with another bill for up to 50% of the invoice cost. Is it me or does that sound like highway robbery? Well, that may have been years ago, but I doublt much has changed. If the company's mission has changed, it's only been modified to rob small business owners using different tools: working capital small business loans, merchant cash advance loans (MCAs). Secondly, Kabbage was a different type of lenders. Sure, maybe they had expensive rates just like National Funding, but they truly excelled at making their process 100% digital end-to-end. Whereas National Funding uses sales people who've been taught a certain closing strategy, Kabbage levered online tools to let the small business owner make an informed decision. I think this strategy is more in-line with today's trends. I, for one, don't want to talk to some sales person that has horse in the race. Call me crazy, and maybe I'm like Miles Dawson from Terminator 2, but I prefer technology. I'd rather do my research and read informative reviews on National Funding and then make a decision if I want to use them. As it relates to my current needs, I'd rather find a "partner" (if you could even call a small business lender that term) that has good reviews and a fully-digital process. From what I understand, Kabbage has that before they were acquired. While I don't know if there's going to be a second act for them (perhaps AMEX will re-imagine them), there should be others lenders that either fill that void or improve upon the legacy that Kabbage left.

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Garret Moreno

2 months ago

How is this comparison even valid. I wonder where I'll rent a video from tonigth, RedBox or Blockbuster Video. Get it? They're both gone. I would say, if you want to compare National Funding against a true competitor, try comparinig them to Ondeck or Credibly.

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Ellsworth Mahoney

2 months ago

I've actually done a few loans with National Funding. I think a better comparsion is them versus Ascentiium. The reason why I say that is that both lenders, National Funding and also Ascentium Capiital offer both products: equipment financing and also small business loans/merchant cash advance.

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Sherri Best

2 months ago

I've been with National Funding for years now. I've done equipment leasing with them and some small business loans. A+ in my book

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Audrey Bruce

2 months ago

Kabbage was excellent to work with. I compared them against Marlin Finance since I had some restaruant equipment leases with them. Marlin was great on the equipment financing, but too consdervative on the MCA front. I needed $100K fast and Kabbage just made things so simple. I was able to move the $ to my business checking same day.

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Buck Sloan

2 months ago

Second that. Kabbage was wonderful to work with. Like everyone says, read the reviews before you choose a financing parnter.

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Eloise Conley

2 months ago

I have two loans with National Funding. While they're not 100% online and there is a bunch of hoops they make you jump through, all in all they got the job done. If you're looking for National Funding reviews, just look at their Trust Pilot. Most are happy with them

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Adrian Gay

2 months ago

Kabbage reviews stink. No wonder they. stopped lending. They probably ran out of money. You can't give small business owners more money that they can pay back especially if you require it paid back inside of a year. That's literally called a "hot dose."

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Lee Braun

2 months ago

I've read Kabbage reviews and National Funding reviews. Am I the only one that can't tell the true difference between the two lenders. Maybe what we need is a wizard of sorts where you can plug in your TaxID and your social and get recommendations that way. What business owner has the time to read these lender reviews???

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Timmy Caldwell

2 months ago

Is National Funding considered a sub-prime lender?

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Israel Kelly

2 months ago

I wouldn't say that they're a sub-prime lender at all. I think that's really more of a consumer term anyhow. On the other hand, wiith how large banks view small businesses today, you may be right. We're literally sitting at the kids table and separated from the larger more powerful businesses. It's a shame too. What are the resouces that a sole proprietor can turn to when evaluating somethiing prior to making a decisioni? There isn't really a trusted resource out there. Has anyone heard of S.C.O.R.E.? Here's a link to them: https://www.score.org/us-small-business-administration-sba I think if you have to make a decision on who to borrow from, ask your accountant, or read review sites. From what I've read National Funding and Kabbage (are they still lending?) are great resources for both merchant cash advance and equipment financing. Beyond that, I think you need to put your big boy pants on borrow from a bank. Not there yet? Well, there's always friends and family.

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Bernard Santos

2 months ago

Funny. You said "friends and family," not the other way around.

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Jennie Mueller

2 months ago

I think people say friends and famiily because it's easier to ask friends to borrow money from than family. Family have bias. They're politcal and tragically, they. may want to see you fail so they can say they're right. Friends are more accepting, as a general rule.

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Charlene Hammond

2 months ago

So, if Kabbage isn't lending any more, why did I just waste 10 minutes reading a Kabbage review? The takeaway section should have said, if you operate a small business and are looking for a merchant cash advance, your only option is to choose National Funding because Kabbage isn't operating any longer.

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Janna Holder

2 months ago

National Funding is a mainstay in small business lending. Trust the process.

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Austin Owens

2 months ago

National Funding is an independent which is rare today. If you look at Kabbage's website, they're now a part of American Express. I would rather support an independent that just make these big companies even bigger. National Funding reviews tell a story of who they are. They actually take the time to work with you and through your issues. I was just listening to Joe Rogan's new podcast on Spotify and his guest was Tim Kennedy. Tim said that he's not oversees ruling their goverments making their decisions, he's training them: by, though and with. National Funding is like that. They're by you helping you to get fast access to capital, throuogh in that they are using an innovative lending process to get small business owners funds when other large banks won't and with in that they are with you when it comes time to modify payments if you're having issues paying, or need access to more capital. That's call a Renewal.

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