Nearly 500,000 new business applications were filed in Texas last year — the third-highest total in the US.
A California-based credit agency has taken notice and is opening an office in Dallas to help new and existing small business owners who are underserved, such as B. Women and minority owned businesses to provide capital.
Brea, Calif.-based Lendistry announced Tuesday that Dallas-based Texas Capital Bank has provided it with $5 million to launch three lending products in Texas: contract financing, nonprofit term loans and seed financing.
“An historic number of new companies have been formed in the past two years, and most of them are minority-owned small businesses,” said Janet Shensky, Lendistry’s senior vice president of strategic partnerships.
Lendistry has spent the last two years speaking to underserved business owners in Texas to find out where the gaps in product offerings were, Shensky said. According to the Census Bureau, about 19% of U.S. employer-owned businesses are owned by minorities, while about 21% are owned by women.
With the new partnerships, contractors who have been in business for at least two years have access to up to $1 million in non-revolving credit lines. Nonprofit organizations, some of which have struggled to access government loans to help them through the COVID-19 pandemic, will have access to loans of up to $5 million. And for startups or companies that have been operating for less than two years, they can apply for funding of up to $500,000.
Founded in 2015, Lendistry has more than 300 employees and over 500 contractors and offices in Los Angeles, Orange County and Baltimore. It has provided $8.7 billion in small business loans and grants to support 586,000 small businesses. Founded in 1998, Texas Capital Bank has $31 billion in assets and approximately 2,000 employees.
Shensky said the two companies began talking about a partnership in November 2020 after Lendistry began providing loans under the Paycheck Protection Program to minority and women-owned businesses across Texas. PPP loans helped employers keep employees on the payroll during the COVID-19 pandemic.
Minority-run Lendistry eventually became the eighth-largest PPP loan provider in the country based on total amount funded, which impressed Texas Capital, said Effie Dennison, director of community development and corporate social responsibility at the bank.
“There were a lot of issues on the front end because there was only a short window of opportunity to get the application in order with your paperwork,” she said. “But they could do that at the highest lender level, and I was dying to speak to them to see what and how they did it.”
Dennison said she was also impressed by Lendistry’s founder, Everett Sands, a University of Pennsylvania graduate who has served as a board member and executive for two minority deposit institutions and has led teams on the east and west coasts for Wells Fargo.
“As a minority business owner and former banker, I knew he knew firsthand some of the challenges and vulnerabilities faced by some of these small businesses,” she said. “There was no education curve that had to happen.”
While there are other community development financial institutions that provide financial services to those who don’t have access to capital, Lendistry stood out and the partnership was intentional, Dennison said. However, as part of the partnership, the bank insisted that Lendistry establish a physical presence in Texas, located on Pacific Avenue in Dallas.
Because Lendistry isn’t a bank, it has more flexibility when it comes to borrowing, which makes it an ideal partner, Dennison said. She hopes the partnership will encourage small businesses to choose Texas Capital as their permanent banking partner.
“We have much tighter regulatory requirements and underwriting and credit policies and risk tolerance,” she said.
Though the lending products aren’t just for startups, Texas Capital believes the surge in new store openings will help improve the partnership’s offering, Dennison said.
“This pandemic has really changed a lot,” she said. “People who never thought of starting their own business before are doing it in droves.”
Natalie Walters, money reporter. Natalie is an award-winning reporter covering banking, crypto, scams, deals and other money-related topics for The Dallas Morning News. She was previously based in New York, where she reported for The Motley Fool, TheStreet and Business Insider. She grew up in Augusta, Georgia and has an MA in Investigative Journalism from Cronkite School.
natalie.walters@dallasnews.com NatalieReporter
