Alternative Finances

Kabbage Grows Consumer Lending Side With Orchard

Alternative small-business lender Kabbage is partnering with analytics startup Orchard Platform to make it easier for institutional lenders to fund consumer loans.

The loans will come through Kabbage’s six-month-old Karrot service, which offers unsecured consumer loans up to $35,000 that are repaid over three to five years. Kabbage will crunch the data, then make it available through Orchard’s marketplace, so investors can decide which ones they want to fund.

“We see Orchard disrupting the institutional sales space in much the same way that Kabbage has disrupted the lending space,” Kabbage CFO Kevin Phillips said in a prepared statement. “The Orchard Platform is a highly scalable, technology driven complement to our direct-sales program.”

No financial details of the partnership were announced, and Kabbage hasn’t said how much loan volume it has generated with the Karrot service. However, it has set up more than $700 million in small-business lending since it launched in 2011.

“We continue to see demand from a diverse group of investors for loans that are being originated at scale,” Orchard CEO Matt Burton wrote in a company blog post. “Technology has increased the operational efficiency and access to loan level data and that enables investors to use their own scorecard, which leads to better insights and performance. Orchard and Kabbage are two successful technology companies expanding the viability of marketplace lending as an asset class while increasing access to credit for consumers and small businesses alike.”

The Kabbage-Orchard deal was announced the day after Kabbage said it is licensing its own small-business loan marketplace technology to Kikka Capital, an Australian company that is gearing up to launch its own small- and medium enterprise alternative lending marketplace for loans up to $100,000. Under that deal, Kabbage will actually operate the automated real-time Kikka marketplace, which is slated to launch in May, but Kikka will handle all the local financial arrangements.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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