Dive Brief:

• Online lender Kabbage is launching a checking account geared toward small businesses, a move that adds full-service banking to the fintech’s suite of products.

• The Atlanta-based company, which has become an active participant in the Paycheck Protection Program (PPP) amid the coronavirus pandemic, said Wednesday it is onboarding customers to Kabbage Checking in phases. The FDIC-insured checking account, which Kabbage is offering in partnership with Green Dot, features a 1.1% annual percentage yield (APY) paid out monthly.

• "We've had lending for a really long time — that’s the product that we launched with in 2009 — and we added payment acceptance last year along with [Kabbage] Insights, which helps our customers analyze and predict cash flow," Kathryn Petralia, Kabbage's co-founder and president, told Banking Dive. "Checking is the glue that holds all of that together."

Dive Insight:

The company has been working on its checking account since last year, Petralia said, adding that the coronavirus pandemic has not affected the product’s timeline.

"In retrospect, I really wish we had launched in February because it would have been a great opportunity to give our customers a faster way to get access to their PPP," she said.

Kabbage has emerged as one of the small-business relief program’s most prolific lenders, nearly doubling its customer count since April.

Petralia said Kabbage has gained more than 220,000 new small-business customers over the past several months. 

"We're excited to have other products to offer them," she said. "We've already seen a huge growth in payment acceptance since it was launched, and we think we’ll see the same kind of adoption for checking."

Petralia anticipates Kabbage Checking’s no-overdraft-fee feature will be a "great incentive" for small businesses to open checking accounts with the fintech. 

"One of the big expenses small businesses face with their checking accounts is overdraft. Because they often are running a tight ship, they don't get access to deposited funds as quickly as they would if they were a bigger business," she said. "I think the product is going to sell itself."

Petralia expects many of the company’s new PPP customers — most of which she said were unable to obtain a PPP loan from their existing bank — will move their accounts to Kabbage’s platform now that it has expanded into checking. 

"These customers who are new to us, who are excited about the products that we offer, are generally frustrated with the services they received from their institution," she said. "We think we're going to see a pretty great adoption."

The fintech said it plans to launch several additional features connected to the checking account later this year, including wire transfers and mobile remote deposits.

In addition to free access to 19,000 ATMs, Kabbage Checking customers will be able to deposit cash at 90,000 participating retailers and service centers nationwide.