Online Microlenders Offer Capital to Young Businesses An eBay merchant quadruples his revenue with help from an online microlender.

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.