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cashKabbage, which runs a service that helps eBay sellers pick up a quick cash advance, announced today that it has raised $6.65 million in its first round of funding.

The online service lets an eBay seller type in his or her eBay user name, and then checks how long the seller has been active and what kind of trading activity the seller has. If the seller passes a certain threshold, based on how long and how many trades he or she has, then they qualify for a quick-fire capital advance ranging from a few thousand dollars to $12,000.

Sellers have to have a minimum amount of transaction volume and have to have been selling for a minimum period of time, and the size of the capital advance scales to what kind of trading activity they have.

The sellers still have to jump through a few hoops like a quick background check. But the whole process takes around 8 minutes, from typing in an eBay name to getting cash in a PayPal account, said Robert Frohwein, the company’s CEO. Kabbage then charges a fee equal to 6 to 16 percent of the capital advance, depending on how long it takes the seller to pay it back.

“Many of them are small businesses, and that kind of cash influx can help them get over some early walls or acquire a month or two months’ worth of inventory,” Frohwein said. “If they were to go into a bank and apply for working capital, they’d be looking at a 6 week process or so.”

The service is currently only available for eBay users. But Frohwein wants to expand to other e-commerce sites like Amazon and Etsy, an online marketplace where artists can sell their works. He wants to take the service to basically any web marketplace where anyone can start selling products. Frohwein wouldn’t get into specifics but said the first step outside of eBay would happen in the next 30 to 60 days — and the company would be tackling the marketplaces one at a time.

The new round of funding will largely be used to expand to other marketplaces and help improve the algorithms and technology that determine what kind of capital advance sellers should get from the service. Frohwein also wants to expand his marketing staff.

Kabbage raised $2 million from a seed funding round led by angel investors toward the end of 2009. This first institutional round of funding, led by BlueRun Ventures and UPS Strategic Enterprise Fund, brings the company’s total funding to $8.65 million.

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