Last week, Kabbage, a leading fintech lender, shut down their lines of credit for all of their existing customers.  And so, when I woke up this morning, I was stunned to see many entrepreneurs in various online forums I am involved in pointing other worried entrepreneurs looking for a PPP source to go and apply at Kabbage.

Be extremely careful – business owner.  There is no public evidence that I can find that Kabbage and many other fintech lenders, as of today, can do anything with the data you are providing to them.  And if someone has evidence to the contrary, please share it with me and I will post right away.

What Kabbage IS doing – on the business side

They want to offer their platform service to lenders who need help processing PPPs.  That could be a good new business for them – but be very clear – that doesn't mean that lenders will be willing to process the applications they are taking.  Most stories yesterday point to lenders being willing to take care of their existing customers – and aren’t looking for new ones.

Whatever comes of this in the end, Kabbage will have a huge pool of data. Add to add to it, they are encouraging organizations that are desperately trying to find resources for businesses they help to sign up and partner with them

Kabbage is also buying up URLs.  Last week Kabbage bought PPPloan.com and PaycheckProtection.com. Check out where they link to:  KABBAGE

What happens when you offer up your information you provide to Kabbage

On their home page, Kabbage tells you that they CAN help you apply for a PPP loan.  Be careful: Can is a far cry from will.

Before you start sharing your information with Kabbage, you have to agree to their standard terms of conditions and privacy policy.  These were all written before this COVID-19 crisis, not now.  Do they protect you?  I have not had time to read them, but someone should.

In the information they ask for, Kabbage is requiring the social security numbers of any applicants who owns 20% or more of a business.  You should be aware that the application banks are required to submit applications to the government does not require this information. 

What will happen after you share your information with Kababge?

Their “promise” is this: 

Once the requests below are completed, we’ll be able to review your application

Borrower be careful: there is no guarantee in that promise, and you don’t have a home for your PPP application yet.

If they can't find a home for your application, what they can do with the data you have provided to them, and how they can market to you in the future is anybody's guess.

Also, while this post is about Kabbage I see other major fintech lenders like Lendio, Ondeck, and Fundera taking PPP applications also. And while I have not had time to dig into what they’re doing yet, that’s up next.

And one final note: I don’t believe that any of what I have described above is illegal.  And that makes this even more frightening, in my opinion.