Credit card giant American Express is in advanced deal talks.

American Express (NYSE: AXP) the largest provider of credit cards to small businesses, is in advanced talks to acquire Kabbage, the online lender to small businesses, according to Bloomberg.

All-cash deal

According to Bloomberg’s source, who was not identified, Amex could pay as much as $850 million in cash for Kabbage. An agreement could be announced within this month, the source said.

Barron’s broke the news earlier this month that Kabbage was considering selling itself. It reported that the lender had received expressions of interest and that it had hired FT Partners for a possible deal. The ticker could be between $750 million to $1 billion, Barron’s source said.

Kabbage is backed by investors such as SoftBank Group (TYO: 9984) and Reverence Capital Partners. Other investors include Thomvest Ventures, Mohr Davidow Ventures, BlueRun Ventures, the UPS Strategic Enterprise Fund, ING Groep (ING), Santander InnoVentures, Bank of Nova Scotia (BNS), and TCW/Craton.

To date, Kabbage has raised nearly $500 million in equity capital and over $2 billion in debt funding. It was last valued at over $1 billion in a 2017 funding round in which SoftBank invested $250 million.

Kabbage – change in the business model

In March Kabbage suspended further loans under its small business lending platform following the coronavirus outbreak. Several employees were furloughed by the company.

In a lucky break, the fintech received approval as a lender under the Small Business Administration’s Paycheck Protection Program.

Kabbage processed over 270,000 PPP loans worth nearly $6.5 billion to small businesses in duress from the pandemic.

According to Amex Chief Executive Officer Steve Squeri, small business customers amongst the bank’s card portfolio were more resilient during the crisis than others.

“Ninety days on now, we actually feel really good about the small-business portfolio,” Amex Chief Financial Officer Jeff Campbell said last month.

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