American Express is buying much of leading fintech Kabbage, which specializes in small-business lending, but will not buy the Atlanta-based firm’s book of loans.
Under the terms of the agreement, American Express will acquire Kabbage’s team and its full suite of financial technology products, data platform and intellectual property. Kabbage’s products include access to flexible lines of credit, online bill payment, cash flow visualization tools, e-gift certificates and the ability to centralize funds through the company’s recently launched business checking account. This product suite is integrated into a single online platform that uses real-time data processing to help small businesses better understand, forecast and manage their cash flow.
With the addition of Kabbage’s technology, products and people, American Express plans to offer a broader set of cash flow management tools and working capital products to its millions of small business customers in the U.S. American Express is already one of the nation’s larger small business lenders.
“For several years, American Express has been expanding beyond our industry-leading commercial card products to offer our business customers a growing set of payment and working capital solutions,” American Express President of Global Commercial Services Anna Marrs said in a statement. “This acquisition accelerates our plans to offer U.S. small businesses an easy and efficient way to manage their payments and cash flow digitally in one place, which is more critical than ever in today’s environment. By bringing together Kabbage’s innovative technology and talented team with our broad distribution capabilities and over 60 years of experience backing small businesses, we can better help our customers successfully emerge from this challenging period and beyond.”
The move sets up a challenge for local banks looking to compete for small business loans when the deal closes later this year.
During the Paycheck Protection Program, Kabbage was one of the most prolific lenders in Greater Boston, according to Treasury Department data analyzed by Banker & Tradesman. The firm closed 1,297 loans, similar to results achieved by local community banks like Medford-based Century Bank & Trust Co. and Natick-based Middlesex Savings Bank.
