LoanWell’s office is in a prime location for a FinTech startup looking to change how small businesses access capital.
The office backs up to Parrish Street in Durham, North Carolina, the historic home for the city’s “Black Wall Street” and a hub for Black business.
That legacy is on full display today as the team looks to empower small business recovery and growth efforts by filling a critical gap in the lending space.
Co-founders Justin Straight and Bernard Worthy met and became “fast friends” while working on separate ventures out of the American Underground in Durham.
Both are third-generation entrepreneurs and knew first-hand the stress associated with accessing capital in the small business world. Together they started working to answer the question: What it would mean if more people had access to affordable capital
The reality is that most small businesses struggle to find loan options under $100,000, while most community lenders don’t have an efficient way to process those smaller loans.
It is a workflow problem, Straight told Hypepotamus.
“It doesn’t matter if it’s a $500,000 loan or a $10,000 loan. It takes time to review bank statements, tax returns, and other documents. So the ability to automate that part of that process reduces the cost and time for community lenders…and they can then start lending below $100,000 because it is a profitable endeavor for them while still making sure that it’s going to be a healthy loan for both small business and for their portfolio.”
That’s exactly what LoanWell has built. The B2B software helps community lenders, CDFIs, and credit unions streamline the loan process. The end-to-end loan management system is ultimately a rules-based decision engine. Individual lenders can set thresholds and criteria on their own terms while communicating with borrowers and verifying documents all in one place. This means, in theory, a bank could approve a loan within 24 hours, as opposed to the more traditional 90 days associated with the process.
It’s a platform “not just for the back office, but for loan officers, the entire team, as well as the borrowers and the cosigner,” added Straight.
TANGIBLE RESULTS IN THE LENDING SPACE
Straight said he is particularly proud of is the fact that 95% of the loans processed on their platform in 2021 were for under $100,000.
The team has played a role in helping small businesses stay afloat during COVID uncertainties. LoanWell was even involved in the $100 million North Carolina Rapid Recovery program and the $250 million State of Illinois Back To Business grant program.
Key to their success, Straight said, is how the team approaches the lending space.
“What I think we bring to this community lending space is that we think like an engineer and not like a banker,” he added.
The “engineering heavy” team is currently 14 people. Proudly based in Durham, Straight said that the team has received funding from NC IDEA and Black Founders Fund as they work to scale.
The team plans to grow over the course of 2022 with new team members joining the Durham office.
“We are proud that that history [in Durham]. But we’re also really focused on what is looks like to build a 21st Century Black Wall Street,” Straight added.