Kabbage Furloughs Majority Of Employees For A Month

  • General
  • March 30, 2020
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  • 4 minutes read
Kabbage CEO Rob Frohwein.

image: Web Summit | Flickr, under Creative Commons license

Atlanta-based small business lending startup Kabbage has furloughed the majority of its employees for a month, according to a source familiar with the matter. The company also happens to have laid off all employees in its Bangalore office without severance packages, the source says. Kabbage is one of several tech companies that now happens to have laid off or furloughed employees amid a business slowdown stemming from the coronavirus outbreak. Being a small business lender, Kabbage with no doubt has been affected by the resulting lockdown from the outbreak. Small businesses around the U.S. have been hit hard and won’t likely be tapping more loans to facilitate day-to-day business at a time when they’re hardly generating revenue.

According to our source, the furloughs were announced by way of a video conference call, being a time when the entire company is currently working remotely. Even though Kabbage instituted a furlough (a sort of temporary leave) as opposed to a permanent layoff, there exist fears of further layoffs at the company, according to our source. However, there may be hope for Kabbage, with the U.S. government having laid out that “any FDIC bank, any credit union, any fintech lender will be authorized” to issue loans to small businesses under the U.S. government’s CARES Act, a $2 trillion stimulus package put into place that includes $350 billion in loan packages for small businesses in the U.S. Kabbage might seize an opportunity to help facilitate loans under that program.

A press release issued earlier this month by Kabbage indicated the company had north of 200,000 small business customers. It’s unclear how that figure currently stands amid the lockdown stemming from the coronavirus outbreak. Kabbage says it has facilitated $9 billion worth of loans for small businesses since its inception. The company has raised north of $2 billion in debt and equity financing, the majority lying on the debt side.

Kabbage’s layoffs happen to come not long after another tech company, TripActions, laid off more than 300 amid a business slowdown.

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