American online lender Kabbage has begun suspending credit lines to its small business clients without notice, according to Bloomberg.
Bloomberg spoke to more than a dozen Kabbage clients who say they only realised that their credit had been cut upon logging into their accounts.
Kabbage, which in 2017 received $250 million in funding from Japan's Softbank, uses data generated through business activity to evaluate and provide loans to small businesses in minutes.
However, the firm has been ravaged by the economic fallout of the Covid-19 pandemic. In recent days it has furloughed a "significant number" of its 500-strong US team and permanently closed down its Bangalore office.
In an email to staff on Friday, seen by Bloomberg, Kabbage CEO Rob Frohwein said: "As of last night, all lending has been turned off."
However, in a statement to Bloomberg, the firm is now claiming that it is retooling to help distribute loans from the Small Business Administration's Paycheck Protection Program.
"Just as manufacturers have retooled their processes to build ventilators and masks, we’re doing the same to reallocate our resources to respond to the national emergency and provide financial products that small businesses need most."