More home-based businesses involved in online selling are getting cash advance loans for their businesses.
Kabbage Inc. reports paying out more than $200 million in annualized cash advances to more than 100,000 small business customers so far in 2013.
The company says the advances represent a substantial increase over the estimated $15 million in annualized cash advances paid out a year ago.
Kabbage is a financing company specializing particularly in loans to small online merchants working from home offices that sell goods on Amazon and eBay. Eighty-two percent of Kabbage customers use money from Kabbage to buy inventory, for example.
Last month, the U.S. Small Business Administration reported an increase in small business lending for the first time in 10 quarters. Overall, the SBA report found small business lending had increased by four-tenths (0.4) of a percent, from $584.1 billion in September last year to $586 billion by the end of 2012.
The SBA report noted an increase of loans in several categories including under $1 million, between $100,000 and $1 million, and under $100,000 in the final quarter of last year. However, the Kabbage Inc. report suggested some loan sizes are still underrepresented.
According to Kabbage’s latest lending numbers , the company’s advances have grown by 298% from 2012 to 2013, while SBA loans under $150,000 have decreased by 8% in that time. (See graphic above showing year-over-year growth,)
Because Kabbage mainly funds home office businesses, particularly those that sell goods on sites like eBay and Amazon, their numbers aren’t necessarily indicative of growth in small business lending as a whole.
The company is also just a few years old, so the increase in lending could be more indicative of its own growth and access to funding than of general economic factors. For instance, Kabbage just closed on a $75 million financing from Victory Park Capital and Thomvest Ventures. This represents the company’s largest funding transaction to date.