Kabbage will offer online personal loans starting this week as it expands its product lineup and tries to compete head-on with the likes of Lending Club and Prosper Marketplace.
Kabbage, based in Atlanta, will use an automated underwriting process to make unsecured loans of up to $35,000 with 36-month or 60-month terms. It will lend at fixed interest rates ranging from 5.73% to 24.75% and will accept borrowers with credit scores as low as "near prime," said Rob Frohwein, chief executive. The new loan product, called Karrot Personal Loans, will be available starting today.
The loans will be funded by institutional investors, similar to peer-to-peer lenders Lending Club and Prosper. Kabbage's chief executive, Rob Frohwein, declined to identify the investors that have already contributed funds toward its loans.
Decisions on personal loans will be made in minutes, Frohwein said. Kabbage will be able to verify 100% of applicants' income during the underwriting process, he said.
Banks and credit unions can partner with Kabbage by licensing its technology and data platform to serve their own customers, Frohwein said. Kabbage is already holding talks with financial institutions about forming such partnerships, he said.