Kabbage has completed the largest securitization by a small business online lending platform. The most senior class of the debt also received the highest ABS rating earned by a small business online lending platform for a three-year facility.
Why this matters: Selling off debt to institutional investors is an important step in the maturation of a lender. First, a startup lender must find ample funds to be able to lend out. Once they’ve achieved certain scale, they’ll look to outside investors to buy these loans, removing them from their own balance sheets. Securitization transfers risk from the lender to an outside investor.
Kabbage keeps growing: To date, the company has helped more than 170,000 small businesses access over $6.5 billion in funding.
Kabbage CEO and co-founder Rob Frohwein recently said on a Tearsheet webinar that the company has increased the lines it offers SMBs by 20x since it launched and continues to automate much of the underwriting process. Partnerships have also played an important role in Kabbage’s growth.
“The new transaction positions the company for continued milestone growth as small businesses accessed more than $2 billion through Kabbage last year and more than $600 million already in the first quarter of 2019,” said Kabbage CFO Scott Rosenberg.