Kabbage sees more mobile lending, women- and minority-owned businesses seeking funds

Online lending platform Kabbage says it is seeing more mobile lending, more women and minority-owned businesses seeking loans, and more businesses from rural and low-to-middle income communities as well.

Small Business Trends reached out to Kathryn Petralia, President of Kabbage, to learn more about its core offering and other steps it has taken to add value to entrepreneurs. Today, 140,000 small businesses use Kabbage, which was launched in 2009 by Petralia and Rob Frohwein. Today, Kabbage has provided more than $4.5 billion in financing, moving the lending process from long lines at a physical bank to a shorter wait on mobile or the web.

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Small Business Trends: I think most people in 2018 know you’re not a bank, but how is Kabbage different? Tell us something that is unique but not prominent, but still important.

Kathryn Petralia: Data is a big differentiator for us. Among our more than 140,000 customers, we have over 2 million live data connections with our customers. This gives us the unique ability to provide a readily available, real-time line of credit that dynamically matches business performance.

Additionally, we offer businesses the ability to request, qualify and withdraw funds entirely through a mobile app. Our complementary Kabbage Card puts the buying power of a small business line of credit in every customer’s wallet with no annual fee, allowing customers to make everyday purchases at any outlet, whether online or in store.

Kabbage is also unique in that we license our technology to global banks, giving them greater reach to serve their small business customers in a meaningful and profitable way.

Small Business Trends: So a larger question for you, and these may just be my observations, but I see tons of entrepreneurs using their personal savings to run their businesses. Why does this happen? I wouldn’t want to be in their place.

Kathryn Petralia: If a business needs less than $250,000 in credit, it’s hard to get a traditional loan. A bank’s costs to take out a $50,000 loan or a $5,000,000 loan are the same, which naturally focuses banks’ attention on larger customers. This pushes many small businesses towards unfavorable options like credit card debt or personal savings to fuel their business.

Using Kabbage is much faster and easier than traditional loan processes. With Kabbage, in minutes, small businesses can apply, qualify, and access working capital, and our lines of credit can reach $250,000. Customers can borrow what they need, when they need it – for everything from payroll and marketing expenses, to equipment, expansion and more.

Working capital has always been a challenge for small businesses and yet it is a key element for growth. Now entrepreneurs have access to the necessary funds to help them grow their business over time.

This means that they no longer have to constantly visit the bank or submit new applications when they need more funds.

Small Business Trends: I’ve noticed that many small businesses don’t understand the true costs of borrowing. How does Kabbage help in this area?

Kathryn Petralia: We encourage business owners to ensure they are completely comfortable and clearly understand the total cost of capital; I’m talking about actual cents on the dollar.

Any loan provider should be able to tell a business owner exactly what the cost will be, including all fees, and without resorting to a rate-based response. Educating yourself is a smart approach so you know you’re choosing the best option for you and your business.

Kabbage works with a group of other lending platforms to provide price transparency with our customers. The result is the SMART Box (Straightforward Metrics Around Rate and Total Cost) initiative, which includes clear and consistent pricing metrics, metric calculations, and metric explanations to help small businesses understand and assess costs. funds.

Small Business Trends: What types of businesses do you help?

Kathryn Petralia: We have continuously expanded our customer base over the years and now serve all types of businesses, both online and offline.

Today, most of our customers are physical stores, representing all walks of business, including professional services, medical practices, spas and salons, retail, restaurants, construction and everything any other kind of business you can imagine.

Small Business Trends: What interesting trends do you notice?

Kathryn Petralia: Three things come to mind: how companies access capital, who does, and why.

To find out how, we saw a surge in the growth of mobile loans. The total number of loans accessible via mobile increased by more than 360% between April 2014 and February 2018. During the same period, the total dollars accessible via mobile devices increased by more than 1,220%.

The which is unique, with credit due to Kabbage’s fully automated application process. We see more minority and women-owned businesses taking advantage of online processes that don’t require physical trips to the bank. We are also seeing an increase in the number of businesses based in rural and low to middle income areas that are turning to online lending services.

The why is shifting to technology. In a recent Kabbage survey of SMBs, we found high expectations for sales growth this year as well as plans to invest in technology, from automation to cybersecurity. Businesses said they plan to invest more in mobile technologies to improve their customer experience and reach new customers by spending more on social media advertising.

Images: Kabbage, Krahenbuhl Global Consulting

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