Partnerships / Acquisitions

Barrons: Online Lender Kabbage Shopping For Buyers

FinTech Kabbage could be seeking a sale, and in doing so, could look to garner up to $1 billion, according to sources quoted by Barron's.

The business did well during the pandemic, out-performing some larger lenders, and the sale could have bids within the month, the sources said.

The potential buyers that have emerged thus far have consisted of financial institutions and tech bidders, though no private equity investors have expressed interest yet, according to the sources.

Kabbage had no comment. The company, founded in 2009 by chief executive Rob Frohwen, ex-chairman Marc Gorlin and president Kathryn Petralia as a way to provide easy funding for small businesses, has aimed to provide amounts up to $250,000, along with underwriting and service loans. The business was an early innovator in the field determining the creditworthiness of small business clients.

In the past few years, the company has gone through numerous purchases and acquisitions. Kabbage has invested over $1 billion in technology, allowing it to automate loan applications, according to Barron's. It has also invested in numerous financial services offerings for smaller businesses in fields like payments, for settling funds faster or analytics and insights.

Kabbage had to furlough a significant number of its almost 600 employees and quit handling new loans in response to the onset of the coronavirus pandemic in March.

However, the company was buoyed in April when it was approved to provide loans for the Paycheck Protection Program (PPP), when it partnered with 135 community banks and gave loans totaling over $6.5 billion to 270,000 applicants.

However, that bump could just be a one-time thing, according to bankers who say the boost may not be sustained since Kabbage hasn't resumed handling non-PPP loans.

But Kabbage has been trying to keep up with the economy, offering new accounts for small to medium-sized businesses (SMBs), with no costly opening fees and the flexibility to begin an account at any stage of the business.

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