Softbank-backed American online small business lender Kabbage is furloughing a “significant number” of its 500-strong US team. It is also completely closing down its office in Bangalore, and executive staff is taking a “considerable” pay cut, according to a report by TechCrunch.
The company CEO Rob Frohwein has cited, “economic fallout of this virus has rattled the small business community to which Kabbage is directly linked” as the reason for the decision in a memo sent to his employees.
“While the duration of the furlough remains uncertain, please bear in mind that the full intention of furloughing is temporary. We simply have no clear idea of how long quarantining or its reverberations in the economy will last,” wrote Frohwein.
Rob added that no company could have foreseen the effects of the virus on the world’s economy over the last few weeks. With supply chains decimated, restaurants reduced to only providing take-out and delivery, and retailers are forced to close their doors for fears of spreading the virus.
Although the company did not specify any particular time period, Kabbage will continue to provide benefits to furloughed employees and intends to bring them back onboard once things smooth out slightly.
Kabbage uses data generated through business activity to evaluate and provide loans to small businesses in minutes. Earlier, it had received $250 million in funding from Japan’s Softbank.
The firm has also made a plea to governors, state legislators, and mayors to put in place “aggressive” action to help small businesses struggling with the Covid-19 fallout.
The economic impact of coronavirus pandemic has started to affect jobs and businesses around the world. Several companies across industries have asked their employees to either take a salary cut or go for unpaid leave. If the pandemic continues for a longer period of time, then experts predict that it will lead to a recession worse than the 2009 crisis.
Sandeep is a journalism and mass communication graduate with a keen interest in politics and business. He is a part of Research & Content team at HrNxt.com.