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.
Gender divisions in sports have primarily served to keep women out of what has always been believed to be a male domain. The idea of women participating alongside men has been regarded with contempt under the belief that women were made physically inferior.
Within their own division, women have reached new heights, received accolades for outstanding physical performance and endurance, and have proven themselves to be as capable of athletic excellence as men. In spite of women's collective fight to be recognized as equals to their male counterparts, female athletes must now prove their womanhood in order to compete alongside their own gender.
That has been the reality for Caster Semenya, a South African Olympic champion, who has been at the center of the latest gender discrimination debate across the world. After crushing her competition in the women's 800-meter dash in 2016, Semenya was subjected to scrutiny from her peers based upon her physical appearance, calling her gender into question. Despite setting a new national record for South Africa and attaining the title of fifth fastest woman in Olympic history, Semenya's success was quickly brushed aside as she became a spectacle for all the wrong reasons.
Semenya's gender became a hot topic among reporters as the Olympic champion was subjected to sex testing by the International Association of Athletics Federations (IAAF). According to Ruth Padawer from the New York Times, Semenya was forced to undergo relentless examination by gender experts to determine whether or not she was woman enough to compete as one. While the IAAF has never released the results of their testing, that did not stop the media from making irreverent speculations about the athlete's gender.
Moments after winning the Berlin World Athletics Championship in 2009, Semenya was faced with immediate backlash from fellow runners. Elisa Cusma who suffered a whopping defeat after finishing in sixth place, felt as though Semenya was too masculine to compete in a women's race. Cusma stated, "These kind of people should not run with us. For me, she is not a woman. She's a man." While her statement proved insensitive enough, her perspective was acknowledged and appeared to be a mutually belief among the other white female competitors.
Fast forward to 2018, the IAAF issued new Eligibility Regulations for Female Classification (Athlete with Differences of Sexual Development) that apply to events from 400m to the mile, including 400m hurdles races, 800m, and 1500m. The regulations created by the IAAF state that an athlete must be recognized at law as either female or intersex, she must reduce her testosterone level to below 5 nmol/L continuously for the duration of six months, and she must maintain her testosterone levels to remain below 5 nmol/L during and after competing so long as she wishes to be eligible to compete in any future events. It is believed that these new rules have been put into effect to specifically target Semenya given her history of being the most recent athlete to face this sort of discrimination.
With these regulations put into effect, in combination with the lack of information about whether or not Semenya is biologically a female of male, society has seemed to come to the conclusion that Semenya is intersex, meaning she was born with any variation of characteristics, chromosomes, gonads, sex hormones, or genitals. After her initial testing, there had been alleged leaks to media outlets such as Australia's Daily Telegraph newspaper which stated that Semenya's results proved that her testosterone levels were too high. This information, while not credible, has been widely accepted as fact. Whether or not Semenya is intersex, society appears to be missing the point that no one is entitled to this information. Running off their newfound acceptance that the Olympic champion is intersex, it calls into question whether her elevated levels of testosterone makes her a man.
The IAAF published a study concluding that higher levels of testosterone do, in fact, contribute to the level of performance in track and field. However, higher testosterone levels have never been the sole determining factor for sex or gender. There are conditions that affect women, such as PCOS, in which the ovaries produce extra amounts of testosterone. However, those women never have their womanhood called into question, nor should they—and neither should Semenya.
Every aspect of the issue surrounding Semenya's body has been deplorable, to say the least. However, there has not been enough recognition as to how invasive and degrading sex testing actually is. For any woman, at any age, to have her body forcibly examined and studied like a science project by "experts" is humiliating and unethical. Under no circumstances have Semenya's health or well-being been considered upon discovering that her body allegedly produces an excessive amount of testosterone. For the sake of an organization, for the comfort of white female athletes who felt as though Semenya's gender was an unfair advantage against them, Semenya and other women like her, must undergo hormone treatment to reduce their performance to that of which women are expected to perform at. Yet some women within the athletic community are unphased by this direct attempt to further prove women as inferior athletes.
As difficult as this global invasion of privacy has been for the athlete, the humiliation and sense of violation is felt by her people in South Africa. Writer and activist, Kari, reported that Semenya has had the country's undying support since her first global appearance in 2009. Even after the IAAF released their new regulations, South Africans have refuted their accusations. Kari stated, "The Minister of Sports and Recreation and the Africa National Congress, South Africa's ruling party labeled the decision as anti-sport, racist, and homophobic." It is no secret that the build and appearance of Black women have always been met with racist and sexist commentary. Because Black women have never managed to fit into the European standard of beauty catered to and in favor of white women, the accusations of Semenya appearing too masculine were unsurprising.
Despite the countless injustices Semenya has faced over the years, she remains as determined as ever to return to track and field and compete amongst women as the woman she is. Her fight against the IAAF's regulations continues as the Olympic champion has been receiving and outpour of support in wake of the Association's decision. Semenya is determined to run again, win again, and set new and inclusive standards for women's sports.