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Kabbage has marked its second major product launch since its acquisition by American Express last year, as it takes aim at providing financing and other services to small-to-medium sized businesses that are often overlooked by banks.
Now renamed Kabbage from American Express, the financial technology company is offering eligible small businesses lines of credit of $1,000 to $150,000. Earlier this year, Kabbage started offering checking accounts for businesses as its first product launch under its new ownership.
“Our goal is to deliver a cash flow management platform,” Kabbage co-Founder Kathryn Petralia told MarketWatch. “Our products are designed to work better together, so you’re not going to five different providers. There’s advantages to that…better pricing and services.”
Generally, businesses can’t use credit cards to pay suppliers, for rent or to expand a business into a new space. Kabbage allows businesses to borrow money to improve revenue opportunities.
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Petralia said Kabbage was the first to use real-time access to third-party data to evaluate eligibility for lines of credit. The framework allows companies to get capital when they need it.
“You’re seeing more investment [by small businesses] in digital experience, e-commerce, online ordering and delivery and payment processing and accounting,” Petralia said.
Since the acquisition of Kabbage for an undisclosed sum late last year, American Express now provides capital for loans by Kabbage.
Kabbage’s business is not broken out by its corporate parent, but its activity has grown since the acquisition, Petralia said.
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American Express CFO Jeffrey Campbell said last week at the Goldman Sachs U.S. Financial Services Conference that the Kabbage acquisition provided a “fabulous set of technology” for the company to aim at small businesses.
“Pairing that [technology] with also some short-term working capital-oriented lending that is not done on a card basis is kind of the third leg of the stool that we think gives us a many, many year runway to continue the kind of growth that we’ve had with small business,” Campbell said.
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Petralia said the backing of American Express will allow Kabbage to provide loans to more medium-sized companies.
The acquisition of Kabbage came as bigger financial firms shop for smaller fintech players to boost their growth.
Amex shares have gained 36% in the year to date, while the Dow Jones Industrial Average
DJIA,
has added 17% and the S&P 500
SPX,
has gained 25%.
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