A fascinating tie up has occurred in the US alternative lending market.
Kabbage has entered into a partnership with e-accountancy giant Sage. The pair have launched a new entity by the name of Sage Small Business Loan. This is Sage’s first undertaking within the alternative finance space, and the first time that the SME lending platform Kabbage has white-labeled its technology.
Headquartered in Newcastle in the UK, Sage has over a million SME clients worldwide. The company automates a whole host of operational business processes, providing SMEs with accounting software, business solutions and payment products. However, access to capital is one area in which Sage has not traditionally been able to assist its client base. The Kabbage linkage changes that.
Sage Small Business Loan will be powered by Kabbage technology and by Kabbage capital. The ship is being steered by Sage Payment Solutions, a division of Sage North America which assists merchants in receiving multiple forms of payment, such as credit and debit cards, loyalty and electronic cheques. The newly launched loans feature has been integrated within existing payment solutions for Sage’s SME client base.
Sage has been sniffing around the alternative finance space for a while. Marketplace lenders and balance sheet lenders often depend upon being able to leverage non-traditional data sources in order to function effectively. The Sage platform is not only a powerful ally for Kabbage in terms of pure deal flow, it also plays host to a huge amount of information. Every small business that uses Sage technology leaves behind it a sizeable digital footprint that begs to be harvested by innovative credit models; manna from heaven to the likes of Kabbage.
Sage Small Business Loan offers customers credit lines from $2k to $100k in size, and fees will only be charged when funds are drawn down. The loans are repayable over 6 month terms, and businesses can take a new loan as often as every 24 hours. In keeping with the Sage mantra, there is no paper involved. The application and funding process is being advertised as a matter of minutes in length. There are no early repayment penalties and no hidden fees.
The application process itself involves completing a brief application form. Sage can then tap into their clients’ business chequing accounts (if they’re synced with the platform) for instant business verification and to conduct a revenue review. Suitability can be ascertained in “seconds”, due to the automated nature of the process.
Paul Bridgewater, CEO of Sage Payment Solutions, weighed in:
“Sage is focused on providing small businesses with the software, services, and resources they need to grow and thrive. This partnership with Kabbage allows Sage to provide small businesses with much-needed financing.”
This isn’t the first time that we’ve seen an alternative lender partner up with a vast SME technology-based network. Lending Club, Ezbob and Iwoca, for example, are all hooked into the Alibaba platform in order to fund purchase orders from Chinese suppliers. Those tie-ups bring deal flow and big data to the platforms, and in turn allow Alibaba to offer a broader range of services – bolstering customer retention levels.
The Sage-Kabbage alliance is fuelled by a similar set of incentives. Whether or not there is some manner of fee-splitting arrangement between Sage and Kabbage (and indeed between Alibaba and its platform partners) is unclear.
Jason Dell, Head of Product at Kabbage, offered his take:
“Sage is our first partner because we believe their large customer base of small and midsized businesses is well suited to quickly benefit from our fully automated lending solution and obtain the capital they need to grow.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.