Kabbage Closes on $17 Million Round to Help Online Merchants Grow

Kabbage, which helps small online merchants obtain working capital, has raised $17 million in a second round of funding.

The Atlanta-based company, which says the word “cabbage” sometimes means “money,” provides cash advances to online merchants who typically have a hard time getting attention from traditional lenders.

Kabbage currently lends to merchants operating on eBay, Amazon and Yahoo, and plans to use the round to expand support to more channels over the next six months, including Facebook, Etsy, Shopify and Sears.com.

The round was led by Mohr Davidow Ventures with participation from Blue Run Ventures, and individuals including Jim McKelvey, co-founder of Square.

Since launching in April, Kabbage says “thousands of online merchants” have obtained working capital, and that on average it advances about $10,000 per request, although it can lend as much as $40,000. A merchant’s annual revenues may range from $15,000 to $7 million. It charges from three percent to 18 percent, depending on the merchant’s risk factors and the length of time for payback.

In addition to supporting merchants in additional marketplaces, Kabbage said it will use the investment to seek distribution relationships, develop new financial products and expand internationally.

Like the online merchants it works with, Kabbage works entirely over the Internet. It automatically analyzes the risk factors in lending to an online merchant, and delivers the cash advance to the merchant using PayPal.

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