Kabbage has established a unique spot in the small business lending market since its founding in 2008, utilizing all sorts of unconventional data sources to support a risk assessment model for lending to smaller businesses that exist almost entirely on the Internet.
Today, coinciding with its presentation at Finovate Europe in London, Kabbage has announced the opening of its lending program for UK small businesses
E-commerce small businesses have had a difficult time securing working capital or growth financing from traditional bank lenders. Their inventory is often either digital or unstable, or changing at an “Internet velocity” that stymies the collateral management techniques of traditional lenders. Their receivables are low at any point in time, or almost entirely electronic, complicating their financing needs.
According to Leena Rao of Techcrunch:
The Atlanta-based company enables online merchants and sellers on marketplaces like eBay, Etsy, and Amazon to get capital they otherwise wouldn’t qualify for at a bank. Many small businesses and online merchants can’t receive financing from traditional banks and don’t want to risk using personal assets like a house to qualify for business loans. Kabbage is disrupting this space by providing a painless way to help these sellers access cash quickly and easily.
In most ways, Kabbage has not changed the basic model of extending commercial credit, which has always involved the gathering of business-related data and an assessment of the associated risks. It has, however, changed the game by its willingness to consider different kinds of data. It has a patent on the analysis engine that drives its business, and a sufficient lending history now to suggest that its risk models are sound. Kabbage and other technology-enabled alternative lenders such as Capital Access Network continue to change the game for small businesses.
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