Kabbage furloughs “significant number” of US staff

US alternative lender Kabbage has furloughed a “significant number” of its 500-strong team, according to a leaked memo.

The document, seen by TechCrunch, also reveals that Kabbage’s India office in Bangalore is being completely closed down and the executive team are taking “considerable” pay cuts.

According to the report furloughed staff will continue to receive benefits and the intention is for them to return to work once the coronavirus crisis ends.

“While the duration of the furlough remains uncertain, please bear in mind that the full intention of furloughing is temporary,” wrote CEO and co-founder Rob Frohwein.

“We simply have no clear idea of how long quarantining or its reverberations in the economy will last.”

The specific challenge Kabbage and other US lenders face is that due to the huge impact coronavirus is having on SMEs in America, sending thousands into administration, it’s unable to lend based on its standard criteria.

In the UK the situation is somewhat better, with the government guaranteeing loans of up to 80 per cent, but only through the somewhat limited Coronavirus Business Interruption Loan Scheme.

Kabbage’s woes are more bad news for SoftBank—which is seeing several of its Vision Fund portfolio companies currently in distress—as the lender raised $250m from the Japanese conglomerate in 2017.