AmEx bought Kabbage but left its PPP loan book behind — borrowers were stranded

Kabbage, the online lender, became the second-largest US PPP lender by volume in 2020 — almost 300,000 approved applications and $7 billion in small-business funding. In August 2020 American Express bought 'substantially all' of Kabbage: the team, the small-business lending technology and the data platform. Not included was the PPP loan book and its servicing obligations, which stayed with the remainder, renamed K Servicing.

When borrowers returned in early 2021 for second-draw loans, they found a company in chaos. The Better Business Bureau filled with one-star reviews calling K Servicing negligent and incompetent; a 'K Servicing PPP Loan Support Group' on Facebook topped 2,000 members. CNBC's calls reached a call centre in the Philippines staffed by people who had never worked for Kabbage, who could give no timeframe for loan reviews; the website listed no executives.

American Express distanced itself, saying the portfolio and associated servicing obligations 'were retained by Kabbage, Inc., which now operates as K Servicing'. Borrowers like Georgia carpet-cleaner Dawn Lindsay — 'we may lose our loan that we desperately need' — were left unsure who was accountable: the K Servicing site itself carried the line 'Kabbage Funding is a trademark of American Express.'

Second-draw PPP funds delayed for thousands of small businesses; BBB flooded with one-star reviews; a 2,000-member borrower support group on Facebook

The deal's perimeter was drawn around the valuable technology while the PPP obligations stayed behind with no staff or systems to serve them.

Kabbage had scaled PPP to 300,000 loans in months; the orphaned K Servicing inherited the servicing volume without the team that built it.

Branding kept 'Kabbage' and 'American Express' entangled on the same pages, confusing borrowers about who owed them service.

No named executives, no headcount and a single support email left borrowers without an accountable counterparty at a moment of desperation.

In an acquisition, what you leave behind can matter more than what you buy: orphaned obligations keep the brand's promise — and its damage — long after the asset has changed hands.

American Express reiterated that customers 'need to contact K Servicing for support'. K Servicing CEO Laquisha Milner said the company was 'committed to providing excellent service'; as of the April 2021 report borrowers were still waiting on second-draw funds their businesses depended on.