FinTech: The PPP Loan Program Helps Kabbage Bounce Back
Fintech lender Kabbage, which suspended its SMB loan business in April, has processed over $3.5 billion in Paycheck Protection Program loans.
Kabbage, the online fintech lender for small businesses, announced Monday that it processed more than $3.5 billion in SBA-approved PPP funding to 110,000 small businesses. It claimed the loans helped restore over half a million jobs at America’s smallest businesses. (PYMNTS.com)
PPP a boon for Kabbage
The loans also helped restore Kabbage’s own business to an even keel. The COVID-19 pandemic had dealt a blow to the fintech’s small-business lending operations. It was forced in April to abruptly suspend new loans. However, it grabbed the opportunity to play a role in the disbursement of PPP loans, earning commissions on the applications it processed. According to the Financial Times, it has earned roughly $175 million in such fees.
In April, Kabbage also furloughed several employees and shut its office in Bangalore, India. The PPP program, therefore, proved to be a lifesaver for the company’s business. Its lending volume last year totaled $2.8 billion.
“In a matter of weeks, we will disburse more dollars to small businesses than we did in all of 2019, serve more new customers than our last two years combined, and process over 40 percent of the average PPP application volume of the largest three banks in the country,” said Kabbage co-founder and CEO Rob Frohwein. “Our technology platform allowed us to reach these milestones with a fraction of the resources accessible to lenders with trillions of dollars in assets, once again demonstrating the power of FinTech.”
PPP – still more scope
Kabbage hopes to service thousands of more businesses across the US with PPP funding. More than $100 billion is still available in the program. Kabbage says its advanced and automated technology enables it to review, submit and receive SBA approval. For most eligible PPP applications the process completes within 24 hours.
Of PPP loans already processed, about 40% were accounted by independent contractors, sole proprietorships, and limited liability companies with a lone member. An overwhelming proportion, more than 90%, of the PPP borrowers, were new customers.
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