City National Bank recently made a $5 million investment in Lendistry, a fintech small business lender that targets undercapitalized communities and a certified Community Development Financial Institution (CDFI).
CNB’s investment will go toward making individual loans of under $100,000 to California small businesses with a high concentration of those being Los Angeles based.
Officials with Lendistry and CNB, which are both based downtown, said they look forward to a continued partnership.
Lendistry Chief Executive Everett Sands said this investment is a starting point and that Lendistry’s relationship with the bank will continue to grow.
“There’s going to be an opportunity for us to originate loans and even sell loans to (CNB), so think of that $5 million as revolving. So, $5 million could become 10, which could become 20, because as they start to buy loans from us, the $5 million acts like a warehouse concept,” Sands said.
David Cameron, head of consumer banking at CNB, said the bank is happy to provide Lendistry with the capital necessary to carry out its mission and hopes to continue building out the partnership.
“What stood out to us was that Lendistry is a minority-led national CDFI uniquely positioned to drive economic growth and development for under-resourced minority businesses through mission-driven lending,” Cameron said.
In terms of Lendistry’s focus, Sands defined underserved and undercapitalized businesses as having a gross annual revenue of less than $1 million and/or having a loan amount of less than $1 million. Additionally, the fintech prioritizes investing in minority- and women-owned businesses.
Cameron also values Lendistry’s principles. In a time where qualifying for a traditional bank loan can be difficult to achieve for new small businesses, Cameron said people can be “vulnerable to predatory lenders.”
“That is why it’s so important for financial institutions like City National to support the important work of organizations like Lendistry who provide affordable, responsible lending to underserved small businesses,” Cameron said.
Sands also stressed the need for businesses to not only have access to capital but to be equipped with the knowledge and understanding of what to do with that capital, which Lendistry also works on with its clients.
CNB previously made contributions related to the financial services provided by the nonprofit, The Center by Lendistry. These services include training businesses on producing their own financial documents, working through SBA processes and getting credit ready.
Lendistry offers both fixed and varied loan structures with the option of refinancing down the line. These loans can be applied to debt, consolidation, expansion and working capital, Sands said.
Sands emphasized the importance of supporting small businesses right now.
“It’s really important as we think about stabilizing the economy and as we think about things locally here that are coming up, whether it be a Super Bowl or the Olympics, we need to think about how we get these businesses engaged, how we get them ready and how we get them supported with working and mobilization capital,” Sands said.
