As the country emerges from the pandemic with a wider awareness of the systemic gaps in the financial industry, Lendistry is using its expertise and focus around the needs of non-traditional borrowers that traditional lenders are also eager to meet.
The fintech has built bank partnerships into its model to help traditional lenders fund loans that are otherwise difficult due to regulatory and operational structures.
Welcome to Texas
One such partnership with Texas Capital Bank, announced in early August, has facilitated the fintech’s expansion into Texas. The partnership spurred three lending products that Lendistry will make available to Texas small businesses: contractor financing, startup financing and a lending program specifically for non-profits.
Our country is witnessing a pivotal moment for small businesses as new enterprises continue to open in record numbers. In Texas — the 10th largest economy in the world, number one exporter in the U.S. and a leading job creator — nearly 500,000 new business applications were filed last year. An unprecedented number of these are owned by women and minorities. So, the question is, what if the largest growing population of business owners, during a booming time for new businesses, have equitable access to capital?
A personal quest
For Lendistry CEO Everett K. Sands, this question is personal. Sands is originally from Washington D.C., where his grandfather owned a tailoring shop and trade school in the 1930s. It was well established in its community and the first African American-owned business in the area to have a contract with the Army, supplying the caps during the Korean War. The business was growing, but his grandfather needed resources to reach the next level. Instead of support, he received some bad tax advice, and couldn’t access the right type of capital for growth.
Growing up, Sands worked at the family business, “I’ve never been crafty — sewing wasn’t in my wheelhouse — so I swept the floors and ran the cash register. This is all to say that I grew up with a picture of entrepreneurship — what it looks like day-to-day — but also how a business becomes a member of its community. I also grew up with my mind filled with what-ifs. What if my grandfather had gotten the right advice and guidance? What if he’d been able to get a responsible loan back then?”
As Sands pursued a career in banking at both minority deposit institutions and national banks, he saw that the same questions and challenges persisted for business owners like his grandfather.
Answering the call
Those what-ifs inspired him to become part of the answer for the business owners who still face a stifling landscape. Lendistry is a progressive small business lender and Community Development Financial Institution that uses technology to address growing barriers to capital in underserved communities. Built to be nimble and to reach the most underserved businesses through a network of community partners, Lendistry’s ability to deploy capital sped up when other financial institutions slowed down as the COVID-19 pandemic set in. It deployed over $300 million Paycheck Protection Program loans to Texas businesses in 2021, with 51% going to minority-owned enterprises.
Lendistry also partnered with several other states to power relief grant programs across the country. In April, it achieved another lending milestone when its Small Business Lending Company received one of only 14 licenses in existence for non-bank lenders to provide SBA 7(a) loans up to $5 million. With this license, it became the only African American-led SBLC in the country.
“We recognize that we’re meeting a moment here,” Sands says. “Minority and women-owned businesses are multiplying in impressive numbers, but deployers of capital within those communities are not. We’re meeting that need, and we’re partnering with other organizations that share our mission to create an equitable ecosystem for business owners like my grandfather.”
Meeting the need
Thanks to the Infrastructure Investment and Jobs Act, $550 billion in new government infrastructure spending has already begun to make its way to projects all over the country, increasing opportunity for small businesses and local contractors. However, last year saw another decrease in the number of small businesses receiving prime government contracts, down 5.7% from 2020. The SBA reports that contracts to both women-owned businesses and enterprises in historically underutilized business zones also fell short of federal contracting goals.
To be green-light ready in this potential-packed environment, minority and women-owned contractors need responsible, reliable financing.
“Contractor financing will give Texas small businesses certainty to bid,” says Todd Adams, Senior VP of Sales at Lendistry’s new Dallas location. “The contractor will have the support to tell their potential client they’re preapproved for the financing required to get the job done. This kind of relationship with a lender is a game changer for a growing small business and underserved Texas business owners have been asking for it.”
Nothing is accomplished nationwide that isn’t first accomplished on a community level.