Nearly 500,000 new business applications were filed in Texas last year – the third highest total in the country.
A California-based lending agency has taken notice and is opening an office in Dallas to help provide capital to new and existing small business owners who are underserved, such as women- and minority-owned businesses.
Lendistry, based in Brea, Calif., announced on Tuesday that Dallas-based Texas Capital Bank provided it with $5 million in funding to launch three lending products in Texas: entrepreneur financing, term loans nonprofit and seed funding.
“There have been a historic number of new businesses created over the past two years and most of them are small, minority-owned businesses,” said Janet Shensky, senior vice president of strategic partnerships at Lendistry.
Lendistry has spent the past two years talking to underserved business owners in Texas to find where the gaps in product offerings were, Shensky said. According to the Census Bureau, about 19% of corporate employers in the United States are minority-owned, while about 21% are owned by women.
Through the new partnerships, entrepreneurs who have been in business for two years or more will have access to up to $1 million in non-revolving lines of credit. Nonprofits, 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 running for less than two years, they can apply for up to $500,000 in funding.
Lendistry, founded in 2015, has over 300 employees and over 500 contractors and offices in Los Angeles, Orange County and Baltimore. It provided $8.7 billion in small business loans and grants to support 586,000 small businesses. Texas Capital Bank, founded in 1998, 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 Paycheck Protection Program loans to minority and women-owned businesses across Texas. PPP loans have helped employers keep their employees on the payroll during the COVID-19 pandemic.
The minority-run Lendistry ended up being the eighth-largest PPP loan provider in the nation based on total amount funded, which impressed Texas Capital, said Effie Dennison, head of community development and corporate social responsibility. form the bank.
“There was a lot of difficulty in the beginning because there was a short time to get the app with your documentation in order,” she said. “But they were able to do it at top lender level, and I really wanted to speak with them to see what and how they did it.”
Dennison said she was also impressed with Lendistry founder Everett Sands, a University of Pennsylvania graduate who served as a board member and director of two minority depository institutions and led teams on the shores. east and west for Wells Fargo.
“As a minority business owner and former banker, I knew he knew firsthand some of the challenges and pain points that some of these small businesses face,” she said. “There was no education curve that needed to happen.”
While there are other community development financial institutions that provide financial services to those without access to capital, Lendistry stood out and the partnership was intentional, Dennison said. But, as part of the partnership, the bank insisted that Lendistry establish a physical presence in Texas, which is on Pacific Avenue in Dallas.
Because Lendistry isn’t a bank, it has more flexibility on loans, making 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 stricter regulatory requirements and underwriting and credit policy and risk tolerance,” she said.
While the loan products aren’t just for startups, Texas Capital believes the flurry of new business openings will help bolster the partnership’s offerings, Dennison said.
“This pandemic has really changed a lot,” she said. “People who had never thought of starting their own business are doing so in large numbers.”