Kabbage, an Atlanta-based online company that provides cash advances to small businesses, said it has closed on a $270 million credit facility that will enable it to serve more clients.
It is the largest credit facility Kabbage has received since starting in 2011, and the second in the past year. Guggenheim Securities, the investment banking and capital markets division of Guggenheim Partners, is behind the latest agreement, while Victory Park Capital was behind a $75 million facility last April.
Chief Financial Officer Kevin Phillips said Kabbage now makes abut 6,000 merchant cash advances a month, ranging from $500 to $100,000. Unlike traditional loans, the company's clients draw on lines of credit based on daily needs. Interest rates range from 1.5 percent to 10 percent, depending on creditworthiness.
Phillips said Kabbage helps fund a segment that routinely has difficulty getting loans from larger institutions, either because the business isn’t large enough, it lacks a credit history or the loan process is too time consuming.
Kabbage assesses a client’s creditworthiness with an online tool that evaluates sales, shipping and other data generated by dozens of business operations. Phillips said Kabbage can make lending decisions within seven minutes, cutting the lending process to days rather than weeks.
The company, which has appeared on Forbes’ America’s Most Promising Companies list and Fast Company’s Most Innovative Companies in Finance list, said it has provided more than $250 million in advances since launching its underwriting data platform in 2011.
Kabbage has 85 employees mostly in Atlanta, with a small group in San Francisco. Employees get free catered lunches and snacks, on-site yoga and beer on tap.
The company’s venture financial backers include the UPS Strategic Enterprise Fund, the private equity strategic investment arm of Sandy Springs-based UPS, Thomvest Ventures, Mohr Davidow Ventures and BlueRun Ventures, among others.
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