UPS partners with company to help small businesses get access to capital

UPS is partnering with a local company that offers small businesses capital, offering to share some of the information it gathers from customers in order to help them expand their businesses.

The Sandy Springs-based logistics company stressed that any information shared with Atlanta-based Kabbage is done by customers voluntarily.

UPS marketing Vice President Joseph Guerrisi said he thinks allowing access to the information will give customers who need more working capital a chance to grow -- and therefore do more shipping.

Kabbage, which began in late 2008, uses information about an applicant's eBay and Amazon sales, Twitter followers and Facebook fans to quickly determine whether the business will receive a working capital advance.

Most advances average about $2,000, but can range from $500 to $40,000, Kabbage Chairman Marc Gorlin said. The company has 15,000 accounts.

Gorlin said there is an increasing need for nonstandard data in making loan decisions, and that an applicant's online activity is often a better indication of his or her commitment to a business than a credit score might be.

"If people are more engaged in their business, they're probably running a better business," he said.

UPS' participation validates the business model, Gorlin said. The companies have a yearlong agreement, and Kabbage is also participating in a strategic enterprise fund run by UPS.

Guerrisi said getting access to working capital is often difficult for small businesses, and the agreement will help make it available for businesses that are looking for loans too small for a bank to be interested in.

"We were able to create a solution that seems to work fairly well," he said.

Guerrisi said the partnership is a test for UPS as it experiments with uses for the data it gathers.

Gorlin said Kabbage is still determining what data is important, and what different data points indicate about a business. He expects information such as shipping data will become increasingly useful in making decisions about what businesses will get funds.

In the future, he said, the company would like to work through banks to provide funds. Kabbage employs about 40 people in Atlanta.