In a world of corporations and big banks, the American dream of starting a business from the ground up is becoming harder to achieve. Getting loans and documentation of credit takes a long time and it is easy to lose steam and become discouraged when banks keep saying no. Meet Kabbage, a unique fintech company that sets out to help small businesses and start-ups get the funding they need to be successful. We talked to Co-founder and President, Kathryn Petralia, to get the inside scoop on what separates Kabbage from the rest of the financial world.
1. Where do things stand in the lending marketplace for small businesses to obtain funding?
Small business lending is accelerating largely due to the customer experience and easy access to funding. It's not that banks don't want to serve small businesses. They do, but it's difficult to do so in a cost-effective way. It costs a bank the same to underwrite a $5K loan or a $5M loan. Because of this, small businesses have been widely underserved. Kabbage is unique in that it provides an entirely automated lending service. Using big data and real-time connections with its customers, small businesses can apply, qualify and access a line of credit up to $150,000 in under ten minutes, without having to visit a bank or reapply for future funding. New approaches like this are super-charging the small business lending world, as well as small businesses, with growth and new possibilities.
2. How does Kabbage work?
Small businesses connect basic business data to Kabbage, allowing us to assess credit worthiness in minutes without requiring elaborate documentation, long-approval times or costly manual processes. Customers receive a decision right away, and qualified small businesses have access to an ongoing line of credit up to $150,000. They can take the amount they need whenever they need it, without additional fees, hidden fees, and there are no pre-payment penalties.
3. What kind of businesses are you looking for and why?
Kabbage helps any small business in any industry, from restaurants to construction, salons and spas, auto dealers and retailers. To qualify with Kabbage, a business needs to have been operating for at least one year and have a minimum of $50,000 in annual revenue or $4,200 per month over the last three months. Customers use Kabbage funding to manage cash flow, hiring and marketing as well as long-term needs such as business expansion or strategic investments.
4. What are the advantages of receiving funding through Kabbage rather than a bank?
The first advantage is time. Time is precious to small business owners. With Kabbage they can receive access funding in minutes, not weeks. The second advantage is a data-driven, ongoing partnership. We have a persistent connection to our customers and their business data, allowing us to provide them the capital they need whenever they need it. They never have to walk into a bank or reapply for funding. It allows our customers to focus on building their business and not on banking.
5. What is “alternative lending" and how is it changing small business lending?
Aside from what's provided above, it also helps remove any bias in the lending process. As it's entirely online, automated and analyzes objective business data, the process is 100 percent blind to age, race, gender and background. It removes any discouragement to apply for funding, freeing small businesses to have a chance to grow.
6. What is the future of small business lending now that alternative lenders are growing?
You'll see banks continually adopt these processes. Because it's entirely online, banks don't need to have brick-and-mortar locations to serve their customers. They only need an internet connection. It allows them to expand and reach new customers without heavily investing in new locations or operational costs. Kabbage partners with top global banks such as ING, Santander and Scotia Bank, allowing their small business customers to access funding in a more streamlined manner and have a significantly better customer experience.
7. How did you get involved in this industry?
I have over twenty years of experience working with large and small companies focused on credit, payments and commerce. It was the late 90s when I began to work in alternative lending so when co-founder Rob Frohwein approached me with his idea for Kabbage I immediately saw the value in using technology to reexamine the lending landscape. I could see that the lengthy, manual process that was used for funding decisions could be automated based on access to real-time data generated by numerous business operation.
8. What are the challenges facing women in the tech and banking world?
In recent weeks and months news of sexual harassment has spread across tech and fintech. The reactions I've seen by male VCs and leaders have included plans to “avoid meeting 1:1 with women". This is a massive step backwards and doesn't address the issue of culture in these organizations. It is incumbent upon both men and women to be beyond reproach in this regard, and creating distance between the genders is bad for women and it's bad for business.
9. What advice do you have for girls and young women looking to break into fields that have been traditionally dominated by men?
Although I haven't always been able to seek out a mentor, taking the time to find other women in these fields for advice and gain a new perspective on career paths is a great way to learn and network. There are some wonderful organizations out there for both girls and women that are really helping to break down barriers that previously stood in the way for women to have successful careers traditionally dominated by men.
Personally, I am over the top excited that we are on the cusp of turning the page on not only a new year but also on a new 10-year window of opportunities and possibilities!
You may be thinking, whoa…I am just embracing the fall season…yikes… it is tough to think about a new decade!
Yet it is this groundwork, this forward thought that you put in place TODAY that will propel you and lead you into greatness in 2020 and beyond. Designing a new decade rests in your ability to vision, in your willingness to be curious, in your awareness of where you are now and what you most want to curate. Essentially, curating what's next is about tapping into today with confidence, conviction, and decision. Leading YOU starts now. This is your new next. It is your choice.
Sometimes to get to that 'next', you need to take a step back to reflect. Please pardon my asking you to spend time in yesterday. Those who know me personally, know that I created and continue to grow my business based on enabling the present moment as a springboard for living your legacy. So, indulge me here! True, I am asking you to peek into the past, yet it is only in order for you to bring the essence of that past forward into this moment called NOW.
One of the best ways to tap into what's next is to clarify what drives you. To design a new decade, ask yourself this question about the past ten years:
What worked? What were my successes?
Make a list of your achievements big and small. Don't type them, but rather use ink and paper and sit with and savor them. Move your thoughts and your successes from your head, to your heart, to your pen, to the paper. Remember that on the flip side of goals not attained and New Year's resolutions abandoned, there was more than likely some traction and action that moved you forward, even if the end result was not what you expected. Once you have a full list of a decade's worth of personal and professional accomplishments, think about how this makes you feel. Do you remember celebrating all of them? My guess is no. So, celebrate them now. Give them new life by validating them. Circle the successes that resonate with you most right now. Where can you lean into those accomplishments as you power into the decade ahead?
Now comes a tougher question, one that I used myself in my own mid-life reinvention and a question I adore because in a moment's time it provides you with a quick reconnect to your unique inner voice.
If it were 10 years ago and nothing were standing in your way, no fear or excuses to contend with…what would you do?
Don't overthink it. The brilliance of this question is that it refocuses purpose. Whatever first came to mind when you answered this for yourself is at its core a powerful insight into defining and redefining the FUTURE decade. Bring your answer into the light of today and what small piece of it is actionable NOW? Where is this resonating and aligning with a 2019 version of yourself?
Then, based on your success list and your answer to the above question, what is your 2020 vision for your business and for the business of YOU?
Designing a new decade begins as a collection of 3,650 opportunities. 3,650 blank slates of new days ahead in which to pivot and propel yourself forward. Every single one of those days is a window into your legacy. An invitation to be, create, explore, and chip away at this thing we call life. One 24-hour segment at a time.
While you have a decade ahead to work on design improvements, you have the ability to begin manifesting this project of YOU Version 2020 right NOW. Based on exploring the exercises in this post, begin executing your vision. Ask questions. Be present. Let go of 2019 and the past 10 years so that you can embrace the next 10. Position acceptance and self-trust at the forefront of how you lead you. One choice at a time.
Don't get bogged down in the concept of the next 10 years. Instead position clarity and intention into each new day, starting today. Then chase every one of those intentions with an in-the-moment commitment and solution toward living a legendary life!