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.
Not too many years ago, my advice to political candidates would have been pretty simple: "Don't do or say anything stupid." But the last few elections have rendered that advice outdated.
When Barack Obama referred to his grandmother as a "typical white woman" during the 2008 campaign, for example, many people thought it would cost him the election -- and once upon a time, it probably would have. But his supporters were focused on the values and positions he professed, and they weren't going to let one unwise comment distract them. Candidate Obama didn't even get much pushback for saying, "We're five days away from fundamentally transforming the United States of America." That statement should have given even his most ardent supporters pause, but it didn't. It was in line with everything Obama had previously said, and it was what his supporters wanted to hear.
2016: What rules?
Fast forward to 2016, and Donald Trump didn't just ignore traditional norms, he almost seemed to relish violating them. Who would have ever dreamed we'd elect a man who talked openly about grabbing women by the **** and who was constantly blasting out crazy-sounding Tweets? But Trump did get elected. Why? Some people believe it was because Americans finally felt like they had permission to show their bigotry. Others think Obama had pushed things so far to the left that right-wing voters were more interested in dragging public policy back toward the middle than in what Trump was Tweeting.
Another theory is that Trump's lewd, crude, and socially unacceptable behavior was deliberately designed to make Democrats feel comfortable campaigning on policies that were far further to the left than they ever would have attempted before. Why? Because they were sure America would never elect someone who acted like Trump. If that theory is right, and Democrats took the bait, Trump's "digital policies" served him well.
And although Trump's brash style drew the most handlines, he wasn't the only one who seemed to have forgotten the, "Don't do or say anything stupid," rule. Hillary Clinton also made news when she made a "basket of deplorables" comment at a private fundraiser, but it leaked out, and it dogged her for the rest of the election cycle.
And that's where we need to start our discussion. Now that all the old rules about candidate behavior have been blown away, do presidential candidates even need digital policies?
Yes, they do. More than ever, in my opinion. Let me tell you why.
Digital policies for 2020 and beyond
While the 2016 election tossed traditional rules about political campaigns to the trash heap, that doesn't mean you can do anything you want. Even if it's just for the sake of consistency, candidates need digital policies for their own campaigns, regardless of what anybody else is doing. Here are some important things to consider.
Align your digital policies with your campaign strategy
Aside from all the accompanying bells and whistles, why do you want to be president? What ideological beliefs are driving you? If you were to become president, what would you want your legacy to be? Once you've answered those questions honestly, you can develop your campaign strategy. Only then can you develop digital policies that are in alignment with the overall purpose -- the "Why?" -- of your campaign:
- If part of your campaign strategy, for example, is to position yourself as someone who's above the fray of the nastiness of modern politics, then one of your digital policies should be that your campaign will never post or share anything that attacks another candidate on a personal level. Attacks will be targeted only at the policy level.
- While it's not something I would recommend, if your campaign strategy is to depict the other side as "deplorables," then one of your digital policies should be to post and share every post, meme, image, etc. that supports your claim.
- If a central piece of your platform is that detaining would-be refugees at the border is inhumane, then your digital policies should state that you will never say, post, or share anything that contradicts that belief, even if Trump plans to relocate some of them to your own city. Complaining that such a move would put too big a strain on local resources -- even if true -- would be making an argument for the other side. Don't do it.
- Don't be too quick to share posts or Tweets from supporters. If it's a text post, read all of it to make sure there's not something in there that would reflect negatively on you. And examine images closely to make sure there's not a small detail that someone may notice.
- Decide what your campaign's voice and tone will be. When you send out emails asking for donations, will you address the recipient as "friend" and stress the urgency of donating so you can continue to fight for them? Or will you personalize each email and use a more low-key, collaborative approach?
Those are just a few examples. The takeaway is that your online behavior should always support your campaign strategy. While you could probably get away with posting or sharing something that seems mean or "unpresidential," posting something that contradicts who you say you are could be deadly to your campaign. Trust me on this -- if there are inconsistencies, Twitter will find them and broadcast them to the world. And you'll have to waste valuable time, resources, and public trust to explain those inconsistencies away.
Remember that the most common-sense digital policies still apply
The 2016 election didn't abolish all of the rules. Some still apply and should definitely be included in your digital policies:
- Claim every domain you can think of that a supporter might type into a search engine. Jeb Bush not claiming www.jebbush.com (the official campaign domain was www.jeb2016.com) was a rookie mistake, and he deserved to have his supporters redirected to Trump's site.
- Choose your campaign's Twitter handle wisely. It should be obvious, not clever or cutesy. In addition, consider creating accounts with possible variations of the Twitter handle you chose so that no one else can use them.
- Give the same care to selecting hashtags. When considering a hashtag, conduct a search to understand its current use -- it might not be what you think! When making up new hashtags, try to avoid anything that could be hijacked for a different purpose -- one that might end up embarrassing you.
- Make sure that anyone authorized to Tweet, post, etc., on your behalf has a copy of your digital policies and understands the reasons behind them. (People are more likely to follow a rule if they understand why it's important.)
- Decide what you'll do if you make an online faux pas that starts a firestorm. What's your emergency plan?
- Consider sending an email to supporters who sign up on your website, thanking them for their support and suggesting ways (based on digital policies) they can help your messaging efforts. If you let them know how they can best help you, most should be happy to comply. It's a small ask that could prevent you from having to publicly disavow an ardent supporter.
- Make sure you're compliant with all applicable regulations: campaign finance, accessibility, privacy, etc. Adopt a double opt-in policy, so that users who sign up for your newsletter or email list through your website have to confirm by clicking on a link in an email. (And make sure your email template provides an easy way for people to unsubscribe.)
- Few people thought 2016 would end the way it did. And there's no way to predict quite yet what forces will shape the 2020 election. Careful tracking of your messaging (likes, shares, comments, etc.) will tell you if you're on track or if public opinion has shifted yet again. If so, your messaging needs to shift with it. Ideally, one person should be responsible for monitoring reaction to the campaign's messaging and for raising a red flag if reactions aren't what was expected.
Thankfully, the world hasn't completely lost its marbles
Whatever the outcome of the election may be, candidates now face a situation where long-standing rules of behavior no longer apply. You now have to make your own rules -- your own digital policies. You can't make assumptions about what the voting public will or won't accept. You can't assume that "They'll never vote for someone who acts like that"; neither can you assume, "Oh, I can get away with that, too." So do it right from the beginning. Because in this election, I predict that sound digital policies combined with authenticity will be your best friend.