American Express has announced that they will acquire the Kabbage SME loans provider that launched 11 years ago in the US. American Express will grab Kabbage’s team and its full suite of financial technology products, data platform and IP built for small businesses. However they’re not taking on the pre-existing loan portfolio.
Kabbage is largely US based although they did launch a foray into the UK in 2013, before retreating in 2015 (and kindly writing off outstanding consumer loans without requiring payback from UK borrowers).
With the addition of Kabbage’s technology, products and people, American Express plans to offer a broader set of cash flow management tools and working capital products to its millions of small business customers in the US. It’s basically an acknowledgement that Kabbage have built a great platform for servicing the needs of small SMEs and although they’ll no longer be known as Kabbage SME loans the platform will continue to serve small businesses.
It’s not yet known how SMEs will access American Express loans via Kabbage technology, but doubtless as they aren’t acquiring the loan portfolio it will require a new application process to American Express and any existing pre-authorisations for future borrowing will be null and void.
“For several years, American Express has been expanding beyond our industry-leading commercial card products to offer our business customers a growing set of payment and working capital solutions. This acquisition accelerates our plans to offer U.S. small businesses an easy and efficient way to manage their payments and cash flow digitally in one place, which is more critical than ever in today’s environment. By bringing together Kabbage’s innovative technology and talented team with our broad distribution capabilities and over 60 years of experience backing small businesses, we can better help our customers successfully emerge from this challenging period and beyond.”
– Anna Marrs , President of Global Commercial Services, American Express
This will come as a double blow to eBay sellers in the US – they’re already in limbo with PayPal finance due to the migration to eBay payments and now they’ll be losing another ready access to finance, at least in the short term until American Express start lending.
All funding for Kabbage SME loans was paused at the end of March this year as they diverted their attention to supporting Small Business Administration aid through the US Paycheck Protection Program in response to the COVID-19 pandemic. This means no new loans have been issued since March.
“We’re so proud of what we accomplished over these past 11 years. Kabbage transformed from the funding startup for eBay sellers into the leading cash-flow management platform for all small businesses. We earned the trust of over half a million small businesses who accessed over $16 billion dollars through our services. Our tremendous team rose to the challenge during the crisis, and together we became the second largest Paycheck Protection Program lender in the nation, approving nearly 300,000 applications.”
– Rob Frohwein – co-founder & kabbagehead, Kabbage