Business banking platform startup Azlo and digital lender Kabbage are teaming up to offer loans to small business customers, including those in underserved communities.

The two companies inked the partnership, called Mission Street Capital, late last week. Their pitch is a fully digital tool that offers access to working capital for gig economy business owners and entrepreneurs with thin credit files.

“Azlo firmly believes that technology and access to financial tools and knowledge is a democratizing force across the small business and cultural landscape today,” said Bryan Crumpler, chief operating officer at Azlo, in an email to Bank Innovation. “We aim to provide resources, tools, knowledge and integrations to help our small business customers succeed in their mission in one consolidated experience.”

Mission Street Capital will use Kabbage’s proprietary data platform to analyze customers’ real-time banking and business performance data (including bookkeeping software and payments processor data) to offer a funding decision in minutes. Customers can see their Kabbage loan information directly on the Azlo dashboard.

Azlo is a digital-only banking platform for small businesses and freelancers. Customers can send invoices, receive payments and pay bills directly from the app. Azlo already has partnered with Stripe, Square and PayPal, and the company hopes partnering with Kabbage will make it easier for customers to get loans quickly.

Kabbage provides small businesses with loans of up to $250,000 and uses artificial intelligence tools to approve or deny loans. The company was founded in 2009 and already has loaned more than $6.5 billion to small business. Customers must be in business for at least one year and be bringing in $50,000 per year in annual business revenue to meet the minimum qualifications.  Atlanta-based Kabbage is a major player among digital lenders focusing on the small business market, and it has raised $2.3 billion in funding so far.

Despite the speed and efficiency of the platform, critics of Kabbage point to the lender’s high interest rates. According to NerdWallet, Kabbage’s annual percentage rates range from 24 to 99 percent.

Robin Abrams, the finance director at Trade Finance Global, said a lot of small businesses feel trapped when they can’t get a loan from a traditional bank. “Our fear is that small businesses are restricted to dual channel optionality — where the only option offered to them by the alternative finance market comes with high interest rates, which can be up to five to 10 times the levels charged by banks,” he said in a message to Bank Innovation. “This constrained approach means that a number of borrowers take facilities that aren’t appropriate for their trading requirements and interfere with long-term growth.”

Because both companies are digital-only, Kabbage and Azlo argue the partnership will benefit SMBs in remote areas. “Azlo is helping fill a crucial gap in our financial system to serve under-banked small businesses,” said Laura Goldberg, Kabbage’s chief revenue officer, in a statement. “Kabbage’s real-time lending platform allows Mission Street Capital to effectively serve any small business in any location to access the funding they need to grow.” 

The partnership comes during a time when larger financial institutions are angling for a larger piece of the small-business lending market. For example, Bank of America launched its Business Advantage 360 app in February, and Mastercard debuted a variety tools on May 1 designed to help small business customers. In April, Visa partnered with Bento for Business and, on May 8, it acquired Earthport to allow international ACH payments.