One of the COVID-19 precautions many businesses are taking is refusing to accept cash. It’s not only an effort to limit the risk of passing on the virus but a step towards an all-digital economy. One that Kabbage, a fintech company and small business lender, is ready to meet.
Kabbage was also the second-largest Paycheck Protection Program (PPP) lender by application volume processing $7 billion in program loans to nearly 300,000 small businesses. We spoke with the President and co-founder of Kabbage, Kathryn Petralia on embracing digital money and how small businesses can optimize their operations during this time.
Some businesses refuse cash-handling as a precaution — what does this mean for the everyday consumer?
Digital transactions have been on the rise for some time due to their ease and convenience for consumers and businesses. Amplified by COVID, contactless and online transactions are playing an increasingly important role to support physical distancing and protect both businesses and their customers.
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At Kabbage, our business is built on moving money digitally. Through automation and real-time, America’s small businesses can access funding quickly, accept payments, analyze and store their money online, quickly and safely. Through the PPP, fintech companies played a major role by disbursing billions of dollars to small businesses in the Small Business Administration’s largest relief effort in history, saving millions of companies and preserving hundreds of millions of jobs. None of that is possible without moving money digitally. It is the new foundation upon which financial services must be built.
For consumers, financial behaviors and expectations follow the same trajectory, though the industry has to do more to support those without bank accounts, credit cards and internet access which are necessary to participate in the digital economy.
What does it mean to go cashless? Is it something consumers should embrace?
There’s a strong indication cashless economies are possible, and COVID has been a catalyst, although it will certainly take time for that to fully evolve. While obstacles exist, there are many upsides to ditching cash, including the convenience of instant and easier access to funds, security and global economies.
Moving to a cashless society needs to benefit the consumer but equally important is equipping businesses to operate safely and successfully. Fintech will usher businesses and consumers into this paradigm through improved digital options for lending, payments and other financial tools that will ultimately help both ease away from cash.
Tell us more about Kabbage Insights and its value. Who benefits from this tool?
Kabbage InsightsTM is a free-to-access tool that provides daily cash flow analyses and forecasts, helping small businesses make cash-flow decisions quickly and confidently. The tool analyzes real-time transactional data to provide businesses with visibility into historic, current, and future cash flow patterns.
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We did a recent study polling over 500 small businesses that found 91% of business owners spend upwards to 20 hours a week managing their cash flow, primarily due to manual calculations and processes. Insights helps them get the information they need quickly so they can get back to focusing on their business, not its books.
Any advice for people starting a new venture or trying to keep their business afloat?
It’s crucial for small business owners to be nimble right now. Find new opportunities that can bring in revenue and pivot your business to adapt to the times. Understanding how the pandemic has impacted all aspects of your business, including your customers and suppliers, can help you determine how your product fits into the marketplace right now. Every small business is different, so you have to find what works best for you.
What’s next in small business recovery. Is Kabbage considering any other services for small businesses?
The next phase is to find opportunities to meet the demand of consumers, which is increasingly online. Adoption of our Payments product grew nearly 4X during the pandemic as businesses sought safe and contactless ways to accept payments. We also launched new business checking accounts that make it easier for small businesses to manage their funds, eliminating common fees, and instead, we pay them with one of the highest APYs in the industry. We’re excited to launch more solutions with American Express that help small businesses in their recovery.
Are other fintech banks doing the same?
Others are taking steps to help their respective customers, which has mostly been tailored to consumers. Kabbage is laser-focused on serving the smallest businesses in America who often have difficulty accessing basic financial services from traditional banks.
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