Kabbage, a finance firm offering short-term loans and merchant advances to small businesses, is trying something different: extending loans to customers via smartphone. The company formally rolled out a new feature in its Android and iPhone apps, which allows its clientele—primarily small businesses marketing via Amazon, eBay, and Etsy—to get loans paid out on the go. According to Kabbage, one of Fast Company's Most Innovative Finance Companies, the new functionality is intended for small business owners away from their computers who need to quickly purchase inventory.
"Kabbage’s vision is to dramatically expand access to capital for small businesses everywhere," Kabbage CEO Rob Frohwein said in a release. "Enabling access to funds from mobile devices is the next logical step to making it even easier for small businesses to get instant access to capital. Now our customers can scoop up the best inventory deals on the spot and use the power of their Kabbage working capital to build and grow their businesses."
The on-the-spot advances, which are the same rate as cash advances conducted via desktop, are available through Kabbage's iPhone and Android apps. But while the instant loans might be tempting, customers be warned: Kabbage's rate schedule is significantly higher than those of comparable conventional loan products from credit unions and banks (note: Kabbage said in an email to Fast Company that the company's rates are lower than other, generally non-bank or credit union, merchant cash advance providers). In effect, users pay extra for the convenience of merchant advances via smartphone.