It seems small business lending fintechs are becoming a hot acquisition target. Reports surfaced yesterday that American Express is looking to acquire SMB lender Kabbage for $850 million, just two weeks after Enova International announced it was acquiring OnDeck. 

As the coronavirus pandemic continues to hobble SMB fintech lenders, other companies are looking to acquire their technology, talent and credit portfolios, according to industry thinkers. With Kabbage, AmEx could expand its own portfolio and launch new services for its business clients.

“[Kabbage] proved it can pivot and can be nimble when it shifted from its traditional credit value proposition to delivering PPP loans,” said Alenka Grealish, senior analyst of corporate banking at Celent. “It shows the power of the platform and the culture. It’s not just technology. It’s people that have a creative mind and can move away from sacred cows, vested interest and to the next frontier. That probably is something a big company like AmEx appreciates.”

According to Grealish, Kabbage’s focus on data analytics and machine learning could help AmEx move into cash flow insights and industry-level analysis. Although she said AmEx’s plans for the Kabbage technology remain hypothetical for now, the card company could expand its underwriting and reach new clients. AmEx could also use Kabbage to provide small businesses with insights into how their business is faring compared to peers in the same geography. 

Spokespeople from Kabbage and AmEx both said they don’t comment on rumors or speculation. Atlanta-based Kabbage, founded in 2009, grew its business for years by providing small business loans to clients often overlooked by banks. According to the company, it provided $5.8 billion in Paycheck Protection Program loans to almost 210,000 small businesses. The company launched a checking account last month, and offers a payments solution as well. In March, Kabbage furloughed a significant number of its U.S. employees and closed its Bangalore office.

Although OnDeck and Kabbage both offered small business loans, the $90 million Enova paid for OnDeck pales in comparison to Kabbage’s reported $850 million price tag. “AmEx must see in Kabbage a loan portfolio that is both larger and concentrated in sectors less impacted by the pandemic,” said David O’Connell, senior analyst at Aite Group. “What this gets AmEx is a terrific SMB lending platform and brand that gains them borrowers that they don’t already have access to.”  

See also: New Kabbage platform aims to bolster small businesses during pandemic

AmEx has been busy with acquisitions in recent years. Last year, the company acquired the restaurant reservation platform Resy, which it used to further customer loyalty efforts. AmEx also acquired the business-to-business payments company Acompay last year, and used it to build its automated accounts payable solution American Express One AP. In 2017, AmEx acquired the restaurant bill payment platform Cake Technologies. 

According to Grealish, AmEx might see Kabbage as a path to future innovations. “[Kabbage] can be a test bed,” she said. “If they can move that quickly, you can test, learn, improve and deliver superior products.”