Home News Kabbage Picks Up $200M Credit Facility To Seed More and Larger Loans

Kabbage Picks Up $200M Credit Facility To Seed More and Larger Loans

by Holly Beilin

Atlanta-based fintech unicorn Kabbage, which facilitates technology-driven loans for small businesses, has added a $200 million lending source to its coffers with a revolving credit facility from Credit Suisse. The facility will allow the company to serve even more businesses with larger loans and higher lines of credit.

Kabbage’s technology allows it to make loan and financing decisions based entirely on automated machine learning algorithms. In a traditionally labor-intensive business, Kabbage changes the game by crunching data on points such as financial history, social media presence, overall market, and more in a personalized play to to determine whether a candidate is worthy of a loan. In addition to providing direct loans, Kabbage also licenses their technology to global financial institutions like Santander and Scotiabank.

In August of this year, the company picked up a $250 million equity investment from Japanese tech giant SoftBank Group, the largest equity raise in the online small business lending industry to date. At that time the company had facilitated more than $3.5 billion in loans and served over 100,000 businesses (that number has now grown to 125,000).

This new credit facility brings Kabbage’s total debt funding capacity up to $750 million, allowing them to issue more and larger loans. It’s also the company’s first transaction to be rated by global rating agency DBRS, a rating that was conducted through Kabbage’s own automation technology.

“DBRS is one of the top rating agencies on Wall Street. To earn investment-grade ratings (“A” and “BBB”) from DBRS we went through rigorous evaluations of not only our technology, but our full operations. Achieving such high ratings is a testament to our fully-automated underwriting technology, and its ability to predictably and responsibly accept, manage and analyze risk for small business lending,” says Kabbage co-founder Kathryn Petralia.

Though they are expanding into larger loans, the company’s commitment to their target market — small businesses — remains strong, according to executives. Small businesses make up over 99 percent of U.S. businesses, but only about half survive five years.

“Small business is our motivation for everything we do,” says Petralia. “They are the heartbeat of economies all around the globe, and we are laser focused on providing them the right product, for the right reasons, at the right price and at the right time. You only get there by truly understanding everything it takes for them to build a business and the data helps show that.”

Kabbage’s platform helps provide an initial capital infusion for growth or to get through hard times.

“People ask me often what the biggest surprise is that I have in this business and I think for me it’s the enthusiasm and gratitude that our customers have for the product that we are delivering to them… They are often able to take advantage of opportunities they wouldn’t have otherwise had to grow their business. Some businesses are also able to use it to smooth out uneven cash flow, and in some cases we have even helped them stay in business during a lean time,” Petralia explained in an interview last year.

Kabbage has been valued at over a billion dollars since 2015 and notable investors include SoftBank Group, BlueRun Ventures, Mohr Davidow Ventures, Thomvest Ventures, Reverence Capital Partners, the UPS Strategic Enterprise Fund, and bank partners ING, Santander InnoVentures, and Scotiabank.

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