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Kabbage files for bankruptcy as it faces PPP fraud probes

Online lender Kabbage was one of the biggest lenders in the first year of the Paycheck Protection Program, processing more than $7 billion in loans.

But for more than two years, the company has also been dogged by questions of whether it was too lax in approving loans that it should have known were fraudulent.

Facing numerous federal investigations into its PPP lending practices, Kabbage or, to be more accurate, the shell of what was once Kabbage, filed for bankruptcy this week.

Kabbage was acquired by American Express in the fall of 2020. The credit card giant took the online lender’s technology and many of its employees, but left behind the PPP loan portfolio, which would be handled by a holding company that now does business under the name KServicing.

READ MORE: A felon, an alleged drug dealer and a comic: How some who may be ineligible got PPP loans

That holding company disclosed in the filings that it is currently facing investigations into its PPP lending practices from the House Select Subcommittee on the Coronavirus Crisis, the Federal Trade Commission, the U.S. Small Business Administration and two U.S. Attorneys, working in conjunction with the U.S. Department of Justice.

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