Kabbage has nearly doubled its customer numbers over the past three months — a direct result of its participation in the Paycheck Protection Program (PPP), the fintech told Banking Dive.
The Atlanta-based online lender said it approved $5.8 billion in PPP loans for 209,000 customers — 97% of whom are new to its platform.
The fintech's customer count stood at 225,000 before the pandemic, meaning the PPP has helped the 10-year-old company almost double its reach in just three months, Paul Bernardini, Kabbage's head of communications, told Banking Dive.
With 209,000 loans, Kabbage also emerged as one of the program's most prolific lenders.
By comparison, Bank of America approved 334,686, JPMorgan Chase approved 268,860, and Wells Fargo tallied 184,072, according to Small Business Administration (SBA) data published Sunday.
But the journey from online lender to a top PPP participant was not an easy one.
The lender, which had been lobbying Congress for the chance to help in the SBA's loan program since the start of the coronavirus crisis, paused lending to some existing small-business clients in late March to reconfigure its platform so it could make PPP loans.
"The first six weeks was so challenging because the guidance kept changing," Kabbage co-founder Kathryn Petralia told Banking Dive. "We weren't sure what we needed to provide and we were deluged with customers who were looking to apply."
Traditional banks had a head start on fintechs and other nonbank lenders in PPP's early days. The Treasury Department didn't approve fintech and nonbank participation until a week after the program's April launch.
"We were only able to take advantage of the last couple of days of the first tranche, but by the time the second tranche started, we really hit our stride and we were able to process a ton of customers early on and just continue to do so the entire time," Petralia said.
Kabbage felt the strain from the pandemic early on, as widespread shutdowns led to a loss of loan origination revenue, as well as losses on the performance of existing loans.
The fintech's core customers are businesses with fewer than 20 employees, a sector "hit first and hardest," Petralia told the Financial Times in early April.
As a result, Kabbage furloughed some staff and closed down its office in Bangalore, India, while executive staff members took pay cuts, according to an internal memo seen by TechCrunch.
But three months later, the fintech has brought back some of its furloughed staff and has been using its newly retooled platform to churn out PPP applications.
The fintech said its technology allowed it to process more than three-quarters of its applications without human intervention or manual review. Its median time from applying to approval was four hours, the company said.
The lender also managed to serve the smallest businesses. Kabbage's average PPP loan size was $28,100, with half of its loans under $13,500, the company said.
PPP allowed Kabbage to gain a substantial number of new customers, Bernardini said — particularly, small businesses that may stick with the fintech for future lending and financial service needs.
"A lot of these smaller businesses weren't able to apply to a bank and there's a lot of anger and frustration with that," he said. "We believe a lot of those will want similar banking services and financial services and I think they'll come to fintechs first when they try to find those."
The timeline to accept new PPP applications expired Tuesday, but Kabbage and other lenders may be able to process additional small-business relief loans soon. The House of Representatives, in a unanimous vote Wednesday, passed a bill to extend the deadline to request PPP loans until Aug. 8. The bill now awaits President Donald Trump's signature.
More than $130 billion of the program's funds remained unused as of Tuesday night. The unused PPP funds will be returned to the Treasury Department, unless Congress repurposes it. More than 4.8 million small businesses tapped more than $520 billion through the program, according to the SBA.