ING Picks Kabbage to Expand Small-Business Lending in Europeby
Partnership will begin in Spain and expand to other countries
Agreement follows equity investment from ING in Kabbage
ING Groep NV is pegging some of its future growth in Europe on a startup that’s been lending for four years.
The Dutch bank said Wednesday that it’s partnering with Kabbage Inc., an Atlanta-based firm that arranges loans online in minutes, to extend credit in Spain. The companies said they plan to eventually expand the program to other countries on the Continent, without specifying how much funding they’re committing to the effort.
“Kabbage’s automated loan application and approval process is both accelerated and incredibly simple for customers,” ING Chief Executive Officer Ralph Hamers said in the statement. “This initiative perfectly fits our strategic priority to increase the pace of innovation.”
Kabbage is among a slew of startups muscling into financial services and attracting attention from large banks. The firm provides more than $1 billion in credit annually to small businesses and consumers through its online platform. Last week, it raised $135 million in equity from Reverence Capital Partners, ING and other investors.
Starting in mid-to-late November, ING will originate the loans in Spain and Kabbage will help fund a portion of them, CEO Rob Frohwein said in a phone interview. The offering will be similar to what it provides in the U.S., he said.
Kabbage offers loans of as much as $150,000 to pay for inventory, hire staff or other day-to-day business needs. Borrowers pay fees of as much as 12 percent for the first two months and 1 percent for each month thereafter, according to its website.
“We’re enabling ING to reach a market that they may not have been reaching before,” Frohwein said. “The objective is to get capital into every small businesses’ hands that need it and that can handle it.”
Another startup, Funding Circle, also announced an expansion in Europe this week. It acquired Zencap, an online lending company that operates in Germany, Spain and the Netherlands and has lent 35 million euros ($40 million) to about 520 businesses during the past 18 months.