Coming to Texas with $5 million in support for underserved business lenders

Nearly 500,000 new business applications were filed in Texas last year — the third-highest total in the nation.

A California-based lending agency has announced it has opened an office in Dallas to help provide capital to new and existing underserved small business owners, such as women-owned and minority-owned companies.

Bray, Calif.-based Lendistry announced Tuesday that Dallas-based Texas Capital Bank has secured $5 million in funding to launch three lending products in Texas: contractor financing, nonprofit lending and startup financing.

“The number of new businesses that have been created in the past two years has been historic, and the majority of them are small businesses,” said Janet Shensky, Senior Vice President of Strategic Partnerships at Lendistry.

Ledistry has spent the past two years talking with out-of-service business owners in Texas to find out where the gaps in product availability are, Shensky said. About 19 percent of U.S. employer businesses are owned by minorities, and 21 percent are owned by women, according to the Census Bureau.

Under the new partnerships, contractors who have been in business for two years or more will receive up to $1 million in revolving lines of credit. Charities, some of which have had trouble getting government loans to help them through the Covid-19 pandemic, will receive loans of up to $5 million. And startups or businesses that have been operating for less than two years can apply for up to $500,000 in funding.

Founded in 2015, Ledistry has more than 300 employees and more than 500 contractors and offices in Los Angeles, Orange County and Baltimore. $8.7 billion in small business loans and support to 586,000 small businesses. In the year 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 LadyStree began offering loans to minority and women-owned businesses in Texas through the Paycheck Protection Program. PPP loans have helped employers keep their workers paid during the Covid-19 pandemic.

The minority-run dairy is the eighth largest PPP in the country based on total revenue. It has become a lender, which has impressed Texas Capital, said Effie Dennison, the bank’s head of community development and corporate social responsibility.

“There were a lot of struggles on the front end because there was a short amount of time to get the application in order with your documentation,” she said. But they were able to do that at a high credit level, and I wanted to talk to them to see what and how they did it.

Denison said she was also impressed with the founder of Lendistry, Everett Sands, a graduate of the University of Pennsylvania who served as a board member and executive of two minority depository institutions and led groups on the East and West coasts of Wells Fargo.

“As a small business owner and former banker, I know firsthand some of the challenges and pain points that some of these small businesses face,” she said. “There wasn’t a learning curve that had to happen.”

While there are other community development financial institutions that provide financial services to the underprivileged, Ledistry stands 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, which is located on Pacific Avenue in Dallas.

Because Ledistry isn’t a bank, it has more flexibility in lending, which makes it a good partner, Dennison said. She hopes the partnership will encourage small businesses to choose Texas Capital as their next banking partner.

“We have much more stringent regulatory requirements and underwriting and credit policy and risk tolerance,” she said.

While the loan products aren’t just for startups, Texas Capital thinks the wave of new business openings will help grow the co-op’s offerings, Dennison said.

“This epidemic has really changed a lot,” she said. “People who have never thought of starting their own business before are doing it in droves.”