B2B Payments

Kabbage Lands Credit Suisse Credit Facility

Alternative small business (SMB) lender Kabbage says it is diversifying the sources from which it obtains money to finance loans through a new deal with Credit Suisse.

The company revealed late last week that it reached a deal with the FI for a $200 million revolving credit facility. The funding will allow Kabbage to focus on accelerating expansion and fueling growth by being able to provide lines of credit with longer terms to more small businesses.

According to the lending platform, this is also its first credit facility rated by DBRS, Inc. The top two classes of the transaction scored an A and BBB rating from DBRS, Kabbage said, adding that assets originated using its underwriting technology are used as collateral.

Credit Suisse’s credit facility brings the total amount of debt funding capacity under Kabbage to $750 million.

“The new, DBRS-rated facility, provided by Credit Suisse, speaks to Kabbage’s maturity in the financial markets and gives us diverse funding options to serve our small business customers,” Kabbage Head of Capital Markets, Deepesh Jain, said in a statement. “To earn an investment-grade rating requires a rigorous evaluation of not only our lending models, automated risk analysis and successful history of reducing bad debt to an industry-low, but also our operational processes — from exceptional customer service to unmatched technology development.”

The $200 million growth facility follows a $250 million equity investment from SoftBank earlier this year, which Kabbage similarly said would go toward expanding small business lending operations and exploring new loan products, as well as non-loan services, for SMBs.

Only weeks ago, news surfaced that a small business borrower in Massachusetts that used the Kabbage platform filed a lawsuit against the company and Celtic Bank. The lawsuit argued they were attempting to “evade Massachusetts’ usury law,” which regulates how much interest can be charged on a loan and questions the definition of a “true lender” in cases of marketplace platforms facilitating loans provided by a separate entity.

——————————–

Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the December 2019 Mobile Card App Adoption Study, PYMNTS surveyed 2,000 U.S. consumers for a reveal of the four most compelling features apps must have to engage users and drive greater adoption.

TRENDING RIGHT NOW