NEW YORK, April 9 (IFR) - Kabbage, a start-up that
specializes in financing for small online merchants, has raised
USD270m from a credit facility backed by receivables that will
dramatically lower the cost of its funding and pave the way for
the company to expand.
The revolving three-year transaction, solely structured and
placed by Guggenheim Securities, is one of the largest credit
facilities ever raised in the small business financing sector.
"This inaugural debt financing for Kabbage represents the
first securitization of merchant cash advances (MCA) and related
products to be distributed to capital markets investors," said
Matthew Perkins, senior managing director and head of ABS and
RMBS banking at Guggenheim Securities.
An MCA is a lump sum payment to a business in exchange for
an agreed upon percentage of future credit card or debit card
Headquartered in Atlanta, Kabbage was publicly launched in
May 2011, and this new deal comes a year after it announced a
USD75m credit facility in April 2013.
Kabbage provides small businesses with financing in as
little as seven minutes by leveraging data generated through
business activity such as online sales, shipping, and dozens of
The securitization, bought by top tier institutional
investors, will give the company more flexibility to expand its
product structure and scale, and to reach small businesses more
Investors were heard to be impressed with Kabbage's ability
to successfully use non-traditional data to quickly assess the
credit worthiness of small businesses, as well as the dispersion
of its MCAs across multiple industries, geographies, and sizes.
Thousands of merchant cash advances were pooled for this
transaction, and Kabbage, which has advanced more than USD250m
to small businesses in its first three years of business, is
hopeful that it could pave the way for other related
"There is growing investor demand for asset-backed
investment opportunities from market-leading, technology and
data-driven small business loan originators," said Perkins.
(Reporting by Charles Williams; Editing by Natalie Harrison and