Small businesses are continuously touted as the lifeblood of the U.S. economy, but it doesn’t seem like the big banks know that. Getting a loan from any of the majors remains a struggle — and that’s where Kabbage comes in. The Atlanta-based online lending platform for small businesses was started in 2009 in the aftermath of the financial meltdown, when getting a bank loan was particularly stressful for smaller firms.
Kabbage claims that in three steps — and in under 10 minutes — a small business can apply and be approved for a credit line of up to $250,000. The company is able to do this because it’s built the machine-learning algorithms that allow it to pull real-time business data of customers rather than rely on traditional bank statements and other static financial documents.
Last year Kabbage funded more than $2 billion to small businesses — one third of its total funding since 2011. It now lends about $10 million a day to customers with rates that range from 1.5% to 10%, depending on the performance factors of the business that are evaluated.
In January, Kabbage partnered with Chinese e-commerce giant Alibaba on a program called Pay Later. It allows U.S. small businesses on Alibaba.com to access up to $150,000 of financing for their orders. The fintech has raised $2.3 billion in funding so far from SoftBank, Santander Bank and others, including a $700 million debt round in April.