At Kabbage Legal, Small Business Loans Are a Big Deal

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By Chris Bruce

June 3 — L. Scott Askins signed on as general counsel of Atlanta-based Kabbage, a fast-growing automated small business lending platform, admittedly more familiar with the technology than with the financial side of fintech.

Askins previously worked at Premiere Global Services, Inc., a leading web conferencing business, and WebMD, the online health information provider.

She started in February at Kabbage, which has offered loans up to $100,000 to small businesses since 2009, at a time of increased scrutiny by regulators to online lenders. Loans by Kabbage and its consumer unit, Karrot, which provides online loans up to $35,000, are made by Celtic Bank, a Utah-chartered industrial bank in Salt Lake City. As Askins tells it, “We are best described as a financial technology lending platform for small businesses.”

The company’s relationship with regulators has been a good one, she told Bloomberg BNA in a phone interview.

“We’ve had very positive conversations with regulators,” Askins said. “We welcome the transparency that’s coming out of all this. They’ve been very open to understanding that regulation has to be thought about in the sense that you don’t want to place increased burdens on access to capital for small business.”

In May, Kabbage and two other small business loan platforms — OnDeck, and CAN Capital — created a new advocacy group, the Innovative Lending Platform Association (ILPA), which aims to advance an array of small-business lending priorities.

Greater Transparency

This month, ILPA will kick off its first project — a proposed model small-business lending disclosure called the Straightforward Metrics Around Rate and Total Cost Box (SMARTBOX), which is designed to give small-business borrowers a set of tools to more easily assess their lending options.

Starting this month, Kabbage, OnDeck and CAN Capital will take feedback on the SMARTBOX initiative from interested lenders, trade groups, policy makers and nonprofits for 90 days. Then, in September, the ILPA will encourage interested parties to adopt or support the SMARTBOX model.

“We think we’re all on the same page to empower small-business growth,” Askins said, referring to the ILPA. “We look forward to working and coordinating with related groups, including policy makers, regulators and other peers that share our focus.”

According to Askins, the initiative arose after all three companies recognized that small businesses need to approach lending decisions with a common language and more transparency with respect to pricing and fees.

“The SMARTBOX tool allows businesses to make apples-to-apples comparisons of borrowing options,” she said.

Askins signed on to head Kabbage’s legal office in February after shepherding Premiere Global Services Inc.’s $1.3 billion going-private sale to Siris Capital in 2015.

“Kabbage attracted me because it’s full of people who keep their eye on the ball from a macro standpoint,” Askins said.

Her tenure at PGi followed stints at WebMD and private practice with Nelson Mullins Riley & Scarborough and later Alston & Bird.

In between her WebMD and PGi gigs, Askins spent a year traveling internationally, including treks in East Africa and Southeast Asia.

Around the World

Kabbage is growing fast, ranking 36 on Inc. Magazine’s “Inc. 5000” list of the nation’s fastest-growing small companies for 2015 and posting a three-year growth rate of 6,722 percent.

The company is active on several fronts. In March, Kabbage announced an initiative with the National Federation of Independent Businesses (NFIB) that allows the NFIB’s 325,000-plus membership to turn to Kabbage for the smaller business loans that some banks might be reluctant to make.

But Kabbage also is looking overseas. In October 2015, Kabbage unveiled a partnership with Netherlands-based ING to make “instant capital” available to small businesses throughout Spain.

Then last month, Santander UK, a subsidiary of Spain’s Grupo Santander, said it will license the Kabbage platform to power automated small-business lending throughout the United Kingdom.

That’s just the start, according to Askins, who said Kabbage also partners with Kikka Capital in Australia.

“We want to empower small-business growth, and we think it’s a global issue,” Askins told Bloomberg BNA in an interview. “We want to continue to expand internationally, particularly with large financial institution partners to help us make that happen.”

Change Happens

Askins, who goes by “Scott,” spent more than 14 years at PGi, where she served in senior posts and oversaw all legal matters.

Talk to her for more than a minute and a consistent theme emerges: disruption.

“Fintech isn’t my background,” Askins said. “My background is disruptive technologies and companies that might be going through a transformation.”

Like other fintech shops, Kabbage is catching the attention of regulators who want to know more about what Kabbage does.

Legal Team

Askins’ team includes a staffer responsible for compliance, a paralegal who helps with corporate governance, a regulatory attorney, and two additional attorneys who recently came on board.

She said the legal unit has an unusually good relationship with Kabbage’s business groups. “All of our business stakeholders invite legal to the meetings at the front end,” she said, saying the legal group has input on contracting, sales cycles, customer service, product details and more.

“It makes life so much easier for everyone and it makes for a smoother process,” Askins said. “We are involved from Day One.”

According to Askins, Kabbage uses outside counsel but keeps an eye on costs. “What works best are alternative fee arrangements, whether it’s a fixed fee for a project or a fee arrangement up to a certain cap,” she said. “I’ve found those to be the best options because they allow you to budget on the front end.”

Her advice for anyone thinking about joining the Kabbage legal team? “You have got to have a business perspective and a practical perspective,” she said. “You are problem-solving. I literally spend half my day not at my desk but running from meeting to meeting.”

A job, in other words, that brings to mind a familiar word. “I love being in disruptive technologies,” she said. “I like the disruption. I like the continuous innovation.”

To contact the reporter on this story: Chris Bruce in Washington at cbruce@bna.com

To contact the editor responsible for this story: Mike Ferullo at mferullo@bna.com