|10/05/2022||Old Kabbage goes BK amid DOJ investigations|
|07/13/2022||Kabbage under DOJ investigation|
|01/06/2022||Rob Frohwein leaves Kabbage|
|08/05/2021||Amex: Kabbage to be landing point for SMBs|
|06/14/2021||Amex puts Kabbage to to work|
The Kabbage Bankruptcy
Potential Match Found in deBanked UCC Filer list
|Company Name||Phone number||UCC Alias 1||Alias 2||Alias 3||Alias 4||Alias 5|
Kabbage by American Express is now Business Blueprint. A lot of terminology on the former Kabbage website, which now forwards to an official page on the American Express website, have already been reworded. Kabbage Funding, for example, is now being referred to as American Express Business Line of Credit and the Kabbage mobile app is now the American Express Business Blueprint app.
On social media, American Express Group President of Global Commercial Services & Fraud Risk at American Express said, “today marks an important milestone for us, as we fully integrate Kabbage into American Express with the launch of Business Blueprint.” Marrs continued by saying that American Express will work towards becoming a digital one-stop-shop for small businesses’ financial needs.
Although it is not specifically stated, negative news headlines related to Kabbage’s former PPP business before the American Express acquisition probably contributed to the official rebrand.
Kabbage from American Express issued the fifth Small Business Recovery Report, an online survey that tracks recovery trends and potential growth of small businesses in the US. Respondents represented industries across retail, marketing, healthcare, financial services, technology, food and beverage, construction, automotive, manufacturing, media, professional services, education, agriculture and more.
After polling 563 small business leaders that included 255 of the “smallest small businesses,” the latest report showcases how many small businesses are doing well in a changing market, as they look beyond challenges over the past two years while simultaneously overcoming the new problems of inflation and supply chain issues.
“Small businesses are preparing for a new type of market. One that’s not driven by the direct impact of COVID-19 – but rather, one determined by the economic aftermath of the pandemic,” said Kathryn Petralia, co-founder of Kabbage. “Economic indicators like inflation will require adjustments, but the new data illustrates how small businesses are making changes and adapting.”
According to the study, small businesses are becoming less concerned about COVID-19’s impact on their operations. The report’s responses showed over 90% of businesses did not have to “stop, slow, limit or shut down” their companies due to the Omicron outbreaks during the holiday season of 2021, while 70% surveyed said they weren’t affected by the variant in any way.
Along with pandemic-induced wounds beginning to heal for small business, respondents to the survey reported their average monthly revenues increased 77% in the past six months, from $47,900 in July 2021 to $84,935 in February 2022. Along with those increases, merchants reported average monthly profits have increased an average of 39% in the same period as well. The study does hint that these growth percentages are heavily weighted toward larger small businesses.
Kabbage says that the smallest small businesses, those with 20 or less employees, reported a 13% increase in average monthly revenues and a 12% increase in average monthly profits from July 2021 to February of this year.
The report touched on hiring rates for smaller merchants, as an initial void of lost workers has been filled. Despite a widespread notion of the job market being wide open, the study found that three quarters of the smallest small businesses said they are not hiring.
The study also found that inflation is increasing prices by an average of 21% across industries. Largely due to increased costs from their vendors and skyrocketing cost of raw materials, smaller merchants are beginning to push these costs on customers.
65% of businesses in the survey said they plan to keep prices high for the next six months, while almost 20% said they plan to raise prices further. Combating increasing costs of their own is an issue in and of itself, and over half (53%) expect their business to be impacted by supply chain issues for up to a year.
Rob Frohwein, who served as the CEO of Kabbage for more than a decade, has left the company. A post he published on social media revealed that his last day was December 17th.
“I didn’t make a big deal – the company has always been about our customers & our employees – and never about any person,” Frohwein said about the quiet exit.
The move is not altogether unsurprising. American Express acquired Kabbage in August 2020 after covid heavily disrupted its small business financing business. Amex first reintroduced Kabbage as a checking account brand and only just recently resurrected its funding operations.
That re-emergence was the catalyst to move, according to Frohwein.
“Why now? Lots of blah blah blahs but it’s the right time,” he wrote. “We’ve relaunched our products with Amex. Now, it’s time to fully devote myself to being an entrepreneur once again.”
Frohwein has kept busy on the side as an advisor & investor in SentiLink, the vice chair of StimLabs, and the CEO of Drum Technologies, Inc, according to his profile, but he apparently has even more plans in the works.
“So what now? Well, I’m pretty excited for what is next. Keep a lookout!”
The benign salutation may actually be a nod to what his next venture is. We’ll see…
When Kabbage stopped lending in the Spring of 2020, many assumed they would pick up where they left off when they were acquired by American Express. Not quite. Since the deal in August 2020, Kabbage had been repurposed as a checking account service.
On Wednesday, however, Kabbage finally announced a return to funding.
“Kabbage from American Express today launched Kabbage Funding™, offering eligible small businesses flexible lines of credit between $1,000 and $150,000—now with the powerful backing of American Express. With Kabbage Funding, small businesses can apply in minutes to access working capital 24/7 to help manage their company’s cash flow.”
The only strange thing about it is the marketing that makes it sound as if Kabbage had never actually been in the funding business until just now.
Kabbage had been one of the largest online small business lenders in the country in 2019, generating approximately $2.7 billion in loan originations. At the time, it was more than Square, OnDeck, ClearCo, Funding Circle, Amazon, and Shopify.
Now that American Express has put “Kabbage to work” with a business checking account offering, the company shared what’s next during the Q2 earnings call.
“..what you’ll see ultimately is the Kabbage platform being the landing point for small businesses,” AMEX Chairman and CEO Steve Squeri said. “And the way you want to think about this is fintech with scale. And so when you think about Kabbage, which is a pure-play fintech in the small business space and you think about American Express and the small businesses, and you combine that together, you have a fintech at scale. Not a fintech growing at scale, a fintech growing from scale with a balance sheet. And so that has always been the vision of Kabbage. As you bring Kabbage into the bank holding company structure, you have to do some other things to future proof it, if you will, and that’s what we’ve been doing. But that’s what you will see.”
American Express business cardholders may be seeing a notification from Kabbage in their online dashboards. This writer did today.
“Introducing Kabbage®, now an American Express company. Streamline your business banking with Kabbage Checking™ and earn 1.10% APY on balances of up to $100,000, with no monthly maintenance fees. It’s digital checking for the way you work today. Terms apply. Learn More.”
The Learn More link goes to the Kabbage website where users can apply. The product itself may not be ready yet however, as clicking the application link tells users that they can join the waitlist because they’re “not currently accepting new customers.”
The rollout is consistent with statements that American Express has made about Kabbage’s role in the company.
Kabbage was hardly featured in American Express’s Q1 earnings report but the recently acquired company was raised in the official call.
Kabbage is an example of how American Express plans to deepen their relationships with current customers and attract new ones by offering a range of solutions beyond the card, said company CEO Steve Squeri. “And in Q1, we began the rollout of the Kabbage platform, which includes a business checking account and working capital solutions to our small-business customers.”
Squeri also said that Kabbage will play a specific role in their post-pandemic plans.
“And you know, as we’ve talked about travel coming back, it comes back in layers. It comes back with consumer, then it’s SMB, and then it’s lodging, corporate. So it is a very different business, which is why we went and acquired Kabbage to have a digital front for these SMEs where they can not only get their card spending done but also get working capital loans, have a transaction bank account, have a merchant financing loan, have short-term loans, and things like that.”
American Express was fairly vague about details related to its recently acquired small business lending platform, Kabbage, in its Q4 earnings disclosed last month, but analysts were curious and asked executives for more information on the call.
“As far as Kabbage goes,” said Stephen Squeri, Amex’s CEO, “I think the thing that we’re really excited about is Kabbage is it gives us a platform that we can interact with our small businesses. And so, to be able to go to one platform to not only get a working capital loan, to get a term loan, to have now a business checking account, to be able to have your card product, to do cash flow analysis on the platform, it gives us sort of an all-in-one platform to serve the needs of small businesses, which is why we did that and what we’ve been shooting for over the last couple of years, it was just a very fortuitous time and a very fortuitous acquisition for us. And we’ll be rolling that out end of Q1 into Q2 and continuing to make enhancements on Kabbage. So we’re really excited about it and the opportunities that it brings from a small business perspective.”
Earlier in the call Squeri said that work was already underway “to integrate and relaunch Kabbage’s suite of products.”
In 2019, Kabbage had been among the top 3 online small business lenders in the country. Covid-related stress likely played a factor in their being acquired by Amex in 2020.
Following that, Kabbage co-founder Kathryn Petralia told deBanked: “American Express shares our vision to be an essential partner to small businesses, and we couldn’t be more excited at the opportunity to continue the important work of providing solutions and innovative capabilities that address a range of small business cash flow needs alongside AmEx.”
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