A study from Kabbage, Inc., a financial services and data platform, has found that 17% of SME loans are now mobile. The data supports the sentiment that more businesses are turning to mobile lending to obtain the funding they need.
The study analyzed the lending habits of 150,000 small businesses, which includes its own customers. The number of loans accessed through mobile devices increased over 360% between April 2014 and February 2018. The amount of money accessed through these loans increased by more than 1,220%.
“The growth of mobile lending is evidence of an enormous change occurring in this industry,” said Victoria Treyger, Chief Revenue Officer at Kabbage. “Small business owners are increasingly digitally savvy and are adopting new technologies faster than ever before. Lending is no different.”
The data supports a new trend among small business owners, who now expect a simple and quick way to apply for and obtain business loans.
“Today, 17 percent of all small business loans and nearly 15 percent of total dollars accessed via Kabbage are through mobile,” said Kabbage in a statement. “At this rate, Kabbage predicts one of every five dollars funded to small businesses will be through a mobile device by the end of 2018.”
Kabbage itself offers a mobile app that allows small businesses to apply for and access small business loans. The app allows customers to access lines of credit up to $250,000. Funds can be withdrawn at any time, and there are no annual fees or upfront costs involved.
“We want to help remove the friction that business owners face every day, which includes saving them time from visiting a bank, filling out paperwork and waiting for an approval,” Treyger told Crowdfund Insider. “The ability to access working capital through their mobile device is a significant help to save the business owner time that can be used to instead pursue their passion and build their business.”
Kabbage has been focused on growing its borrower base. In August 2017, SoftBank invested $250 million in the company. Kabbage planned to use the money to expand its lending products and potentially offer new products, such as payroll services and insurance.
The company also has plans to expand into new markets, including Asia. Rob Frohwein, CEO of Kabbage, said last August that the company was in talks with banks in China, India and Japan to license its technology.
Kabbage has also been diversifying its financing sources. In November 2017, the company made a deal with Credit Suisse to offer a $200 million revolving credit facility. The deal enabled Kabbage to offer lines of credit with longer terms to more small businesses.
The credit facility brings Kabbage’s total debt funding capacity to $750 million.
“The new, DBRS-rated facility, provided by Credit Suisse, speaks to Kabbage’s maturity in the financial markets and gives us diverse funding options to serve our small business customers,” said Deepesh Jain, Kabbage Head of Capital Markets. “To earn an investment-grade rating requires a rigorous evaluation of not only our lending models, automated risk analysis and successful history of reducing bad debt to an industry-low, but also our operational processes – from exceptional customer service to unmatched technology development.”