MWBE lender takes community-based approach

Lendistry, the sole administrator of the New York State COVID-19 Pandemic Small Business Recovery Grant Program, focuses on closing the wealth gap created by barriers and lack of access to small business financing.

Everett Sands, CEO of Lendistry.

Everett Sands, CEO of Lendistry. (Photo courtesy of Lendistry)

MWBE lender Lendistry acted as the sole administrator of the New York State COVID-19 Pandemic Small Business Recovery Grant Program during the coronavirus pandemic, which provided grants to currently viable small businesses and micro-businesses that struggled economically during COVID-19. 

In addition to its work in New York, Lendistry also administered funding through the California Small Business COVID-19 Relief Grant Program, the largest effort of its kind in the nation to support small businesses and nonprofits facing mounting financial challenges due to the pandemic. Working with its non-profit, The Center by Lendistry, Lendistry also provided small business clients with technical assistance, business courses, business advisors and access to other programs and services. 

Part of Lendistry’s mission is to close the wealth gap created by barriers and lack of access to small business financing. As the recovery from COVID-19 continues, New York Nonprofit Media spoke with Lendistry CEO Everett Sands to learn more about the lender’s approach to lending, particularly in underserved and undercapitalized communities, and how it has provided nontraditional funding options to those organizations needing it most during the pandemic. 

This interview has been edited for length and clarity.

Please discuss Lendistry’s approach to lending.

We were started by financial technology experts with the thought process of community lending. What we felt was important was to create a hybrid of FinTech and a community bank. The FinTech part is important because it is an unbiased approach to lending. It follows up that cliche that the bank is open from 9 to 5, but the borrower is only able to do banking services from 5 to 9. So there's a mismatch there. Technology helps us solve that. And then on the other side of it is that it provides scale, which we all know is needed to reverse some of the things we're seeing like the wealth gap and access to capital. 

How does understanding the community improve upon the services you offer?

We recognize that there are programs that have been underutilized – from grant proposal programs, more access and faster access to state capital to those who need it, to loan guarantees and credit. And when you're looking at underserved and undercapitalized communities, it really boils down to two things: homeownership, where it's about the down payment and the deposit, and collateral. Historically, MWBEs have had a hard time being able to meet those two.

Please describe the kinds of financial products you offer and how you can make them work for clients who normally would have had difficulty getting approved for financing.

The direct answer to your question is term loans, commercial real estate loans and lines of credit. We try to make adjustments to a product, in an innovative approach, to make the product more accessible to the underserved and the undercapitalized. If I'm a business owner buying a building, most products require you to be 51% owner-occupied. Now during these difficult economic times with a recession and inflation, that business may say, 'Well I don't want to own or occupy 51%. I want to own or occupy 25 or 30%." ... We have products that allow them to still be owner-occupied ... at a better interest rate, better terms, if it's owner occupied, versus an investment property. 

What is your source of funding?

We have about 50 different banking partners. Generally speaking, we're leveraging one of those banks to provide capital to us, and then we turn it around and fund the small business. And then we have grant programs, generally that are funded by the state. We're acting as an administrator of the capital and we're deploying it to traditional businesses based on the guidelines that have been written within the legislation that created that program.

What happens when a customer has little or no collateral? 

We do traditional collateral, which is a commercial building, a home, business assets, cash. But we might participate in a program where let's just say the borrower doesn't have collateral. An example is the State Small Business Credit Initiative. This money from the U.S. Treasury was given to various states which then had an opportunity to provide credit to small businesses. 

Please talk about your work administering the New York State Small Business Recovery grants.

We ran the program for the state of New York. Most of these programs are related to the Cares Act, which is where capital comes from. It was very much in the thought process that the pandemic was going to do a sprint and then a marathon. I'm sure we can agree it was probably two marathons – the Boston Marathon followed by the New York Marathon. That emergency money had some requirements. One of them was that the business had to have been started June 1, 2018. And the reason why is because when the governor's emergency declaration came in March of 2020, they were trying to decide what would be a viable business. So they went back to June 1, 2018. If you were able to survive all those months, you probably were viable.