Online lender Kabbage launches checking accounts for small businesses
By Anna Irrera
(Reuters) – Atlanta-based online lender Kabbage Inc said on Wednesday it would offer checking accounts to small businesses, making it the latest fintech startup to expand its offering to a wider range of services banking.
The accounts, which have no minimum balance requirements or maintenance fees, will pay an annual return of 1.10%, disbursed monthly, the company said.
Kabbage checking accounts will be issued by partner bank Green Dot Bank, a member of the Federal Deposit Insurance Corporation and are insured up to $250,000, the company said.
The launch comes as small businesses across the country are reeling economically from the novel coronavirus pandemic, which has led many businesses to close permanently.
During the pandemic, Kabbage participated in the Paycheck Protection Program, the government’s small business stimulus program, and issued 225,000 approved loans for nearly $6 billion, he said.
“Since March, we have focused on providing these funds to small businesses because the funds can be forgiven entirely,” said Kabbage President Kathryn Petralia. “We are now the third largest PPP lender in the country by application volume.”
Kabbage is one of several fintech start-ups to have recently diversified beyond its core offering, with many looking to attract customer deposits. Money transfer startup TransferWise said in June it planned to offer its first investment product in Britain within the next year, while online investment managers Betterment and Wealthfront have recently started offering cash or checking accounts.
Kabbage checking account users will be able to deposit money at a network of 90,000 retailers and service centers, and withdraw money for free at thousands of ATMs across the country, he said.
(Reporting by Anna Irrera; editing by Emelia Matarise)