Before I get into the interview, first let us describe what does Kabbage for small businesses.
Kabbage provides a credit line for small businesses, the company can tap into when they need working capital. Credit lines are between $ 00 and $ 100,000. There is no charge for the right to borrow. (Many credit lines carry fees, even if no money is borrowed.) If a company on the credit line Kabbage the company moved more than six months (or 12 months in some cases) to pay the amount back. There is a minimum monthly payment due of "interest" and capital.
The following is based on my notes from the interview and Rob answers reflect, but the words are mine.
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When and why borrow people
The need for working capital ? small companies vary by sector and are to be seasonal, as a rule. For retailers the heaviest demand for bonds from mid-August to mid-November, as they stock up for a holiday in inventory. As they begin this inventory to sell, they tend to pay back loans. For retailers, buying inventory is the most common use of funds. For the construction industry, winter and spring are difficult times Borgen and use Kabbage construction materials and equipment to buy. Other industries such as restaurants and beauty salons need the funds all year long, but to increase their financing needs before the busy holiday season.
Have you seen a sharp increase in demand by 15 April or end of the month?
There may be some modest increase, but get money to pay taxes or make payroll seems to be a big driver of demand. We are seeing more activity at the beginning of the week than at the end of the week.
What is your approval rate for small businesses is?
I that would appreciate for companies that do more than $ 5,000 per month in revenue, our approval rate is about 80%. Instead of small businesses for a certain amount of money are, if we approve the transaction for credit, we offer a maximum credit limit that you can borrow against. You do not have to take them all at once the means, but can borrow the money when they need it.
Many small businesses have attracted dislike their credit. How do you deal with this problem?
We draw no credit history at any of that is true with Kabbage. Only those will be approved with a very high probability with Kabbage for credit, make a formal credit report.
Small Business Borrowers can take up to 6 months to repay loans. Do they tend to use the entire six months?
For our product six months, the loan in around 4 months fully paid. The early payment is achieved to make the comparison a lump sum by increasing the size of the monthly payment typically. However, our borrowers tend to fall into two types of payment behavior. We have borrowers who rarely use our service, where its borrowing is driven by a specific set of non-recurring circumstances. These borrowers tend to their loans to pay as soon as possible. Borrowers, for Kabbage is an integral part of their cash flow management tend to use the full six months pay.
Have you have a prepayment penalty?
With Kabbage there is no prepayment penalty, and to pay early, borrowers can save on the $ amount of the fees that have to pay it.
Let me explain, argue many of our competitors have no prepayment penalty. However, they fail to explain what it is early to pay any benefit. You have to pay the same dollar amount, if you have paid too early. In fact, the effective rate on the loan is higher if you pay early! Despite the fact that borrowers are charged a higher interest rate when early payback, they claim, there is no prepayment penalty.
reduce A Kabbage small business borrowers who will repay their loans early, the amount of money they have to pay back. For example, if a $ 10,000 loan is repaid in 2 months instead of 6 months, the small business is $ 400 cost of credit!
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How to Get a Small Business Loan obtained
Robert Frohwein is the CEO and founder. of Kabbage.
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