Online Microlenders Offer Capital to Young Businesses An eBay merchant quadruples his revenue with help from an online microlender.
By Michelle Goodman •
Opinions expressed by Entrepreneur contributors are their own.
In 2008 Chris Byrne opened The Gear Geeks, an eBay store that sells musical equipment, with $2,800 in cash. To purchase inventory, the Huntington Beach, Calif., 'trep relied on a business line of credit from his bank. When the recession caused his credit line to dry up, Byrne turned to Atlanta-based Kabbage, one of several online microlenders that offer short-term capital to young businesses.
The $5,000 credit line Byrne received from Kabbage in August 2011 soon grew to $38,500--nearly three times the amount of his former bank line of $13,500. With the ability to purchase more inventory, he saw his revenue quadruple from $10,000 to $15,000 a month to $40,000 to $60,000.
Kabbage, which launched in November 2010, serves online merchants who sell via Amazon, eBay, Etsy, Shopify and Yahoo. The company uses a merchant cash-advance model. "But it's nothing like your mother's MCA model," says Kabbage co-founder and COO Kathryn Petralia.
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