Small Business Lender Kabbage Sees Big Lift in Mobile Applications
In recent years the process of obtaining a small business loan has changed tremendously as many online lenders and other alternatives have emerged. One such FinTech option is Kabbage — an Atlanta-based online lender. While many small business owners still apply using the “old fashioned” method of desktop computers, it seems many are now using their mobile devices to secure funding.
According to an interview Small Business Trends conducted with Kabbage President Kathryn Petralia, mobile applications have risen sharply over the past few years. In fact she reports that, between April 2014 and February of this year, loans accessed via mobile have increased by 360%. Meanwhile the amount of money accessed via mobile has grown 1,220%. Given the easy, automated process that Kabbage offers, Petralia also says the company also sees an increase in loans to women, minority-owned businesses, those in rural areas, and other underserved markets.
There are several reasons why entrepreneurs and small business owners have been turning to online lenders and now mobile options. For one the application and approval process is often far faster than traditional options or SBA loans. Secondly lenders like Kabbage, Lending Club, Able Lending, and others allow owners to borrow smaller amounts than some banks might require. Additionally, while approval rates among big banks continue to inch higher, online lenders may utilize a number of different factors to determine creditworthiness and make lending decisions.
Unfortunately one of the issues that’s arisen with the advent of online lending has less to do with the creditworthiness of the borrowers but the trustworthiness of the lenders. More specifically there has been criticism that some alternative lenders don’t properly state what fees borrowers will incur. To that point, Petralia said, “Any lending provider should be able to tell a business owner exactly what the cost will be, including all fees, and without resorting to a rate-based answer.” That said, she went on to note that consumers should still be vigilant about researching their options, saying, “Educating yourself is a wise approach so you know you’re selecting the best option for you and your business.”
Given the growing popularity of mobile for everything from sending e-mail to booking travel, it really shouldn’t be shocking that more small business owners are turning to their smartphones when it comes to applying for loans. At the same time, one has to wonder whether the ease of obtaining funding could be leading some borrowers to make costly mistakes. As Petralia suggests, before borrowing, small business owners should always research their options and ensure they understand the commitment they’re making. Once you’re sure that you’re making a smart move, then you can go ahead and apply — on any device you choose.