|04/07/2021||Kabbage's PPP biz left with struggles|
|02/25/2021||Kabbage to be relaunched end Q1, early Q2|
|09/11/2020||Some Kabbage PPP borrowers raise red flags|
|08/31/2020||Become CEO optimistic about OnDeck/Kabbage|
|08/17/2020||American Express to acquire Kabbage|
Potential Match Found in deBanked UCC Filer list
|Company Name||Phone number||UCC Alias 1||Alias 2||Alias 3||Alias 4||Alias 5|
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.”
On Friday, American Express announced that it had completed its acquisition of Kabbage.
“Kabbage, An American Express Company will continue to provide quick and easy cash flow management solutions for small businesses, now backed by the trust, service, and security of a American Express,” American Express wrote on social media. “We’re excited to welcome Kabbage’s talented colleagues to American Express. Together we will combine our over 60 years of experience backing small businesses with Kabbage’s innovative technology to support our customers through this challenging time, and help them get back on their feet and thrive.”
Meanwhile, below is a copy of a Q&A deBanked had with Kabbage co-founder Kathryn Petralia that appeared in our magazine’s July/August issue.
Q: How specifically do you think the pandemic will change the way SMEs bank?
A: The pandemic will first change with whom they bank, and that choice will change the way they bank. For perspective, one hundred percent of Kabbage customers have a bank account, but very few of them can get a loan from their bank. We launched Kabbage Checking earlier this year to serve the smallest of businesses without sacrificing the features they expect and offering other products banks don’t. We’re focused on making cash flow tools accessible to the businesses traditionally underserved and overlooked, and the pandemic has been a catalyst for businesses to find new solutions.
Q: How might the dynamic of banking change after the crisis?
A: It was well-reported that businesses without an existing credit relationship with their bank were turned away from applying for PPP loans. We’ve heard directly from many of our PPP customers that this will compel them to change banks, and the demand for Kabbage Checking has reflected that sentiment since its launch. In the short term, businesses of all sizes and ages will seek out and sign up for new, tech-forward banking partners. In the long term, that shift will change customers’ expectations of what banks should offer. For example, prior to the PPP, Kabbage had issued well over a billion dollars to customers during non-banking hours. On-demand, 24/7 access to funding and cash flow insights, or faster settlements and money transfers will soon become commonplace, and large retail banks will need to adapt if they want to capture or reclaim these customers.
Q: How are these changes likely to impact alternative lenders and funders?
A: For starters, single-product lending companies will realize they must diversify their offerings in order to compete in the new financial-services marketplace. I would expect to see lenders launch new products to more resemble a bank. Conversely, traditional banks will need to begin adopting automated ways to serve customers with a tech-forward experience. Especially in the new normal where customers may be apprehensive about in-person banking meetings, they must adapt online to acquire and serve customers.
Q: What’s still needed to help Main Street recover?
A: The PPP was only the first phase; we’re not out of the woods yet. Businesses now need to restart and eventually grow. The crisis made business owners realize they need tighter controls over their cash flow, as many found themselves on the back foot and ill-equipped to withstand a long-term crisis such as the one through which we are all muddling.
They’ll need cash-flow tools to be more prudent and appropriately plan for similar events. Having said that, it’s not only on the shoulders of small businesses or tech solutions. They need customer demand, and local economies need to begin to reopen safely so consumers feel comfortable returning to normal commerce. That will take the support of cities and states encouraging consumers to shop local so small businesses have greater incentive to recall their employees and get back to work.
Q: How can alternative lenders and funders best play a role in this recovery?
A: Much of what we’re already doing is exactly what our economy needs. For the most part, fintech companies serve the customers banks won’t or can’t. That reality is unfortunately unchanged today. That’s why during the pandemic Kabbage made every effort possible to provide products that helped SMBs through this crisis. With respect to PPP, we helped nearly 300,000 small businesses access over $7 billion, helping preserve an estimated 945,000 jobs. Our payments product saw a near 4X spike in adoption as businesses sought contactless payment options. We built www.helpsmallbsuiness.com in three days to allow any small business to generate needed revenue by selling online gift certificates. We also launched Kabbage Checking, giving small businesses a new banking option, and Kabbage Insights remains available and free to access for any small business.
Q: What changes do you expect to see in the alternative lending and funding industry as a result of the pandemic?
A: Everyone will expand their services. Whether it’s larger companies expanding their solutions through acquisitions, or start-ups investing beyond their primary product, everyone will aim to enhance their offerings to give customers more data-driven products that help them rebuild.
Q: Kabbage just agreed to be purchased by American Express. Should we expect to see more consolidation in the alternative lending/funding space? If so, over what time frame and why do you expect this to happen?
A: I would not be surprised if we saw more deals announced before the end of the year.
Q: Tell us a little about why Kabbage decided to sell and why the timing was right?
A: For us, it has always been about finding the right company with the right mission and intentions. We just happened to be in the middle of a crisis when the conversations started, despite having the financial capacity to support operations for multiple years. 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.
Eden Amirav, CEO and co-founder of Become, shared his optimistic insight into what the recent round of acquisitions in the fintech lending world might mean. With the purchase of Kabbage by AMEX and OnDeck by Enova, the industry is moving toward consolidation.
“For many years, we saw many different players and high competition, now we’re starting to see consolidation,” Amirav said. “When a big player like AMEX puts in close to $1 billion [allegedly] in an acquisition of the IP and tech of Kabbage- an amazing technology for underwriting- we think that it’s a very good sign of belief in the industry, it shows the huge potential that AMEX sees in it.”
Eden said from the beginning, Become was happy to be a part of the journey of Kabbage as a partner.
Become is a company that empowers small businesses to improve their fundability and choose lending options through proprietary tech that rates businesses for their loan potential. Become has been a partner with Kabbage in the past, the company says.
Last year, Become underwent a rebranding, adopting a contact-free tech-only mindset. Needless to say, that move came with some unforeseen benefits- contact-free finance is now the name of the game.
Become partnered with Kabbage for loan facilitation in PPP, and Amirav said it was a huge opportunity for alternative finance.
“At the beginning [of the pandemic] there was no supply – practically all the lenders stopped lending,” Amirav said. “We built a very quick process that allows small business to sign the PPP and get the forms ready and get access to the funds as quickly as possible.”
Amirav said that it is because of the dire need for capital and traditional institutions’ inability to respond that alternative fintech markets became so attractive. He hopes that through the purchase, Become will have the opportunity to keep working with Kabbage and feature AMEX on the platform.
“Now that PPP is over we will start seeing alternative lending come back with a more important role- and I think the fintech lending industry as a whole has proven that it has an important role in assisting small business,” Amirav said. “Banks are serving big companies and traditional clients, fintech companies are really there to serve the mom and pop shops.”
Today Kabbage announced the launch of its latest service, business checking accounts. Targeting small-sized businesses and offering no monthly fees, 1.10% APY, and a Kabbage debit card; Kabbage Checking is available now and is part of an effort by Kabbage to transition from being a pure SMB-funding company into a cash-flow management company.
“Kabbage is a full financial services platform that’s focused on solving on cash-flow management for small businesses.” President Kathryn Petralia explained in an email. “A business checking account is a core function of how they manage their money, and we saw an opportunity to build them a solution specifically designed for them – while simultaneously reducing their costs and increasing their yield.”
Launched in the wake of a study which reports that over 40% of small businesses are looking to change their bank following struggles with their Paycheck Protection Program applications, Kabbage is optimistic that fintechs an online lenders will benefit from a wave of interest following the failures of financial institutions in the face of the coronavirus.
“Amidst one of the largest financial crises in history, we helped over 225,000 small businesses access services many of their long-time bank partners would only provide to their largest customers,” the President said in a statement. “We believe in the businesses too often left out, overlooked, and underestimated. Kabbage Checking is a new banking service built to give those small businesses an upper hand to earn more, save more, and grow their business faster without sacrificing anything they expect from a bank.”
Two months after its first round, Kabbage and Uber have partnered to offer a streamlined PPP application process for the latter’s drivers. In a surprise move, the companies have come together to offer Uber drivers a fast-tracked and automated option to apply for the Payment Protection Program. According to a Kabbage press release, the specialized application will be sped up by prepopulating relevant information, outlining eligibility, and automated decision-making.
“They basically will go through a totally separate path that’s purpose-built for Uber drivers,” said Kabbage CEO Rob Frohwein in the statement. “With more than $100 billion left in the PPP, there is a meaningful opportunity for the self-employed to still apply and receive funding. With Uber, we aim to provide hundreds of thousands of more independent contractors access to federal funding.”
With Uber defining its drivers as independent contractors rather than employees, these drivers were initially ineligible for certain unemployment benefits. However the CARES Act expanded these benefits to include independent contractors from various industries.
This is not Uber’s first foray into providing some sort of assistance for its drivers. Following the signing of the CARES Act in March, the ride-hailing company released a detailed guide for its drivers explaining how to apply for these benefits. As well as this, in France the company has offered drivers emergency grants during the pandemic as well as a stipend to cover sterilizing and safety products.
For Kabbage, this marks a step away from the dark days of late March which saw the company close its offices in Bangalore, India; cut executives’ pay; and furlough an unspecified but “significant” amount of its previously 500-person United States staff, according to a company memo.
The PPP program, which ran out of money within two weeks of its first round, had more than $130 billion left to give to business owners by June 9, just three weeks before the SBA is scheduled to close the application process on June 30.
This week, Kabbage released its latest product, Kabbage Insights, to the public. Having been available privately since February 10th, the service is now free to all Kabbage customers. Released a month after Kabbage Payments, Insights adds to Kabbage’s ecosystem of products by helping small business owners identify and prepare for cash flow deficits.
Acting almost like a virtual assistant, Insights links to and analyzes a business’s financial data, serving up a report of how the company has performed historically, how it’s doing currently, and what the projections for its future are looking like. While this may sound like standard business planning and budgeting, the time and resources required to provide in-depth financial analyses are usually only in possession of larger companies. Insights, according to Kabbage’s Head of Income Products, Abraham Williams, is an attempt to bridge this gap between what larger businesses have traditionally had access to and what small business owners have been unable to claim.
“Kabbage has, for a number of years now, used data science, modeling, and machine learning to come up with financial decisions on whether to give someone a loan, and we’re right a lot of the time.” Williams told deBanked over the phone. “With this, we’re able to bring this modeling to our small business customers.”
As well as providing a breakdown of a company’s financial history and future, Insights offers a threshold alert system wherein customers can set a desired low-balance amount and receive notifications when they are nearing it. And by pairing Insights with Kabbage’s Small Business Revenue Index, users will be able to compare their company against those of a similar size/location, so long as these businesses are Kabbage customers. The data used to make these comparisons will be aggregated and anonymous.
The public launch of Kabbage is part of the company’s plan to create a fintech ecosystem that completely eliminates waiting times, and is the culmination of Kabbage’s ten years of collecting and analyzing small business financial data.
Or, as Kabbage CEO Rob Frohwein said in a statement: “As a small business owner for many years, I spent many sleepless nights trying to figure out whether I’d have the cash to pay my various expenses, including payroll at the end of the month and it’s been a mission of mine to solve this ubiquitous problem for all small business owners ever since. Kabbage is pleased to launch Insights, taking on this burden for small business owners and providing them with cash flow analyses that large enterprises have at their fingertips. We will continue to level the playing field for the small business owner.”
Kabbage Launches Kabbage Insights™, Allowing Small Businesses To Take Control of Their Cash Flow With Just a Few ClicksMarch 4, 2020
ATLANTA – March 4, 2020 – Kabbage, Inc. today launched Kabbage Insights, a fully automated tool that calculates and predicts cash-flow patterns to help small businesses identify cash surpluses and deficits. With the launch, Kabbage addresses one of the most vexing problems faced by small business owners. The new product comes just one month after the public launch of Kabbage Payments™, continuing the company’s rapid innovation to build a suite of integrated products that simplify cash-flow management for U.S. small businesses.
In less than 10 minutes, any small business can connect their real-time financial data to Kabbage Insights and access an analysis of their company’s historical, current and future cash-flow 24/7. The product continually evaluates the transaction activity of a customer over a 90-day period and organizes it in an easy-to-understand dashboard, allowing customers to quickly visualize their net growth without taking the time to calculate it themselves. Kabbage’s customer base of over 220,000 small businesses has immediate access.
As a leader in predictive analytics and artificial intelligence for small businesses, Kabbage Insights produces personalized forecasts to predict the future cash position of a business. Customers can then set a desired low-balance threshold and receive automated alerts if accounts are predicted to dip below it, empowering small businesses to identify, act upon and prevent cash deficits before they occur.
Paired with the Kabbage Small Business Revenue Index, Kabbage Insights is also the first product available that allows small businesses to compare their company’s performance to similarly-sized businesses operating in their state and industry. The result is an unparalleled cash-flow tool that’s free for small businesses, helping them to anticipate changes, benchmark their growth, plan ahead and make more confident business decisions like when to cut expenses, invest or borrow.
With Kabbage Insights, small businesses can:
- Review cash-flow on the go via the intuitive mobile dashboard.
- Analyze daily performance and review money movement at a glance.
- Borrow strategically with forecast data to inform funding decisions.
- Save time, as studies show 91 percent of small business owners spend as many as 20 hours per week manually calculating cash flow.
“As a small business owner for many years, I spent many sleepless nights trying to figure out whether I’d have the cash to pay my various expenses, including payroll at the end of the month and it’s been a mission of mine to solve this ubiquitous problem for all small business owners ever since,” said Kabbage CEO Rob Frohwein. “Kabbage is pleased to launch Insights, taking on this burden for small business owners and providing them with cash flow analyses that large enterprises have at their fingertips. We will continue to level the playing field for the small business owner.”
Kabbage, Inc., headquartered in Atlanta, is a data and technology company providing
small businesses cash flow solutions. Its suite of products includes Kabbage Payments, helping small businesses get paid and access the money they earn faster, Kabbage Funding, providing access to flexible lines of credit in minutes, and Kabbage Insights, a powerful and predictive tool to calculate cash flow. To date, Kabbage has provided more than 220,000 U.S. small businesses access to over $9 billion of working capital. Kabbage is funded and backed by leading investors, including the SoftBank Vision Fund, BlueRun Ventures, WildCast Venture Partners, Thomvest Ventures and others. All Kabbage U.S.-based loans are issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC. Kabbage Payments, LLC, a subsidiary of Kabbage, Inc., is a registered Payment Service Provider/Payment Facilitator sponsored by Fifth ThirdBank, N.A., Cincinnati, OH. For more information, please visit www.kabbage.com.
Today Kabbage, the Atlanta-based fintech company that has been funding businesses since 2009, announced its latest product: customized short-term loans that are a result of the combination of Kabbage Payments and Kabbage Funding.
The loans, which run for the length of 3-45 days, are best suited to those businesses who need funding to cover issues in cash flow caused by the unpredictability of revenue, says Kabbage’s Head of Income Products Abraham Williams. “Rent and payroll are on set days every month, but getting paid is variable. We’ve done loans for 6, 12, and 18 months, and we’ve seen that people pay those off sooner, so we saw a need to have a short-term loan to fill gaps in cash flow.”
The terms of such loans will be decided upon by making use of the aggregate data that Kabbage has access to. With its customers providing a number of data points, such as their Amazon account, banking details, payment processes, and social media accounts, Kabbage is in “a really unique position because of the way that we make decisions on loans for small businesses,” notes Williams. “We can really see a very complete picture of a business, which can be different than how other people are essentially underwriting and assessing risk for loans.”
Two options are available for repayment: a traditional balloon payment to be paid at the end of the 45-day period, or a percentage of each sale made using Kabbage Payments going towards repayment. The latter of these provides more flexibility, with merchants being able to choose the percentage of each sale that is to go toward Kabbage and, as well as this, the fee attached to the Kabbage Payments option is smaller.
With the fee’s amount and terms being dictated by aggregated data, Kabbage is describing them as “dynamic,” providing individualized offers. Fees begin at 0.1% with the minimum amount to be borrowed being $500 and the maximum set at 10% of a merchant’s available line of credit for the short-term.
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