As everybody knows, small businesses are the backbone of the US economy by being 99% of all companies, employing over 50% of private sector employees, and generating approx. 65% of net new private sector jobs.
As a real economy engine, they have always brought high level products and services to the market and offered working opportunities to people, supporting the growth and prosperity of the country.
To thrive, beyond the native creativity and acquired skills of entrepreneurs, they also rely upon some external support. One of these has always been financial support in the form of credit and cash flow from banks. Anyways, since the housing bubble burst, in general, small businesses have suffered from a “credit access” issue, a struggle which has made it difficult for them to maintain their market position and jeopardize their live.
In the latest years, bank lending to SMEs has lightly improved but, even due to regulatory constraints, it will unlikely rise above pre-crisis levels.
To oppose this trend, some online lending platforms have been created to offer small businesses quickly disbursing credit, typically loans of less than $250k.
Among them, Atlanta, GA-based Kabbage is one of the industry-leading data and technology platforms for lending.
Funded via $240m in venture capital by renowned firms including Reverence Capital Partners, SoftBank Capital, Thomvest Ventures, Mohr Davidow Ventures, BlueRun Ventures, the UPS Strategic Enterprise Fund, ING, Santander InnoVentures, Scotiabank, TCW/Craton, SV Angel, and others, the company has built a financial services data and technology platform that provides automated, flexible funding to small businesses quickly by leveraging data generated through business activity such as accounting data, online sales, shipping and dozens of other sources to understand performance.
Among other loan types, Kabbage offers a small business line of credit that lets companies borrow money to meet short-term needs or goals, including covering payroll when they hire new people, purchasing supplies and inventory, compensating seasonal cash flow shortage, fund estimated quarterly tax payments, etc.
When compared with other products, the line of credit has the following advantages:
– borrowers can take funds at any time, as long as they don’t exceed the maximum set in the line deal,
– borrowers can pay interest and fees on the portion of funds they withdraw, and
– borrowers can set up more flexible repayment schedules.
Kabbage provides lines of credit up to $100,000 to small or online businesses with less established credit histories through an automated process which leverages a real-time engine. This engine uses key business information to assign a line of credit, which dynamically adjusts over time to provide small business owners with precisely the right amount of capital they need to grow.
Within five years of launching, the company has originated $2 billion in SMB loans through its platform and recently expanded its offering to include 12-month duration loans. Apart lines of credit, Kabbage provides a multitude of products to deal with different needs including business, online, SBA, working capital, Peer to Peer, factoring, micro, commercial lending, short term business, equipment, inventory, and payroll loans as well as small business credit cards, merchant cash advances, and revolving credit solutions.
All loans are issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC.