Gabriel Villarreal of Opportunity Fund, a Small Business Borrowers’ Bill of Rights (BBoR) founder and member of the Responsible Business Lending Coalition (RBLC) sat down for a conversation with Everett K. Sands, co-Founder and CEO of Lendistry. The organization became a Signatory of the Rights in 2017.
 
Lendistry Cofounder and CEO, Everett K. Sands, understands the challenges entrepreneurs face in accessing capital.
 
In 2014 Everett was working at a large bank that, despite its large loan volume, was still turning down a considerable number of small business loan applicants. The bank’s strategy for expanding its commercial loan activity was to purchase loans from community banks. However, this initiative coincided with a decrease in the total number of community banks due to a series of mergers and acquisitions. This meant fewer community banks doing small business lending and fewer loans for larger banks to purchase, creating a critical market gap for underserved small business owners. This is where Lendistry comes in.
 
Providing loans in the range of $50,000 to $2,000,000, “The back of the envelope business plan was to create an alternative financing company that could serve this market and have larger banks purchase our loans,” says Everett. In this way banks would be able to better fulfill their community obligations and underserved entrepreneurs would have the capital they needed to grow their businesses. Partnering with a community bank at the outset, which was later acquired, Lendistry became a CDFI in 2016 so it could partner with larger financial institutions from a funding perspective and continue to serve their community.
 
The company’s youth and community focus are Lendistry’s strengths. “Our successes and challenges go hand in hand,” says Everett, “Our youth in this industry means we’re open to change and innovation. One of our biggest successes is the unique team we’ve built. We’ve drawn people from the banking world and people who care about the community in a broad sense. We speak eight languages from Spanish to Korean, and this separates us from the norm.” This openness to innovation extends to the way Lendistry leverages technology. “Lendistry has built our lending platforms from scratch atop of more traditional processes, like making SBA loans smoother and more user-friendly. It’s impossible to build everything,” states Everett, “but from a data management perspective we have a lot of our own systems and can be self-reliant because of it.”
 
In terms of the needs of entrepreneurs in growing their businesses, Everett takes a unique perspective informed by his time in both the banking and community development worlds. “There’s been a hyper concentration on affordable housing and microlending in the CDFI space,” says Everett. “I think that’s good but from a macro-perspective, with banks making the operational decision to focus on loans above $1,000,000 and CDFIs focusing on loans less than $50,000, there’s just a huge gap. That’s the space we’re trying to fill.” According to Everett, in order for businesses to grow, create jobs, and create wealth in their communities, there needs to be more of a focus on helping these mid-sized businesses get the capital they need. “We’re helping the LMI population because, for 19% of the businesses we help, 40% of their employees would qualify as low-income. We support those jobs. We also care about minority businesses, women, and people of color, because they have jumped into the entrepreneurial space in a major way,” says Everett. In his view, “if we don’t uphold these populations and provide the financing in this space,” the alternative for these borrowers is high-cost lending with potentially terrible results.
 
Lendistry became a BBoR Signatory after engaging with RBLC members Community Investment Management and Opportunity Fund. Already a responsible lender, the BBoR was a natural fit for the organization. “CDFIs are supposed to go where banks can’t go. That’s our job,” says Everett. Lendistry does this using innovative technology, driven staff, and an eye towards the community. This is what makes them an important signatory of the BBoR.
 
We thank Lendistry for taking the time to talk with us about their lending and the importance of the Small Business Borrower’s Bill of Rights in the small business lending Industry. 
 
If you are interested in learning more about the Small Business Borrower’s Bill of Rights please email info@borrowersbillofrights.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrower’s Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.

Gabriel Villarreal of Opportunity Fund (a Small Business Borrowers’ Bill of Rights founder) sat down for a conversation with Dory Rand, President of Woodstock Institute. The organization became an Endorser of the Rights in May 2018.
 
Woodstock Institute is a leading nonprofit research and policy organization working in the areas of fair lending, wealth creation, and financial systems reform. Woodstock Institute works, “to create a financial system in which lower-wealth persons and communities of color can safely borrow, save, and build wealth so that they can achieve economic security and community prosperity.” Founded in 1973 in its namesake town of Woodstock, Illinois, the organization is now housed in the metropolitan center of Chicago. Its President, Dory Rand, is a longtime advocate for marginalized communities.
 
“I was actually acquainted with Woodstock long before I was ever an employee here,” says Dory. “In 1997, I was doing poverty law, dealing with the rollout of electronically delivered public benefits, and we realized that this was actually a great opportunity to expand access to bank accounts and other financial services to low-income families.” She worked with Woodstock on various financial services initiatives before formally joining the organization as its President in 2008. Since that time, she has overseen the expansion of several initiatives related to financial services, including a deep-dive into the state of small business lending. “Policy and research have always been the central focus for Woodstock,” says Dory.
 
One of Woodstock’s signature research initiatives in the past couple of years has been publication of a series of reports called Patterns of Disparity which, in collaboration with several other community-based organizations, examines Community Reinvestment Act (CRA) reported small business loans by banks in different regions of the country. In the absence of a comprehensive data set examining all small business lending nationwide, this research gives a comprehensive snapshot of the state of small business lending by banks, particularly in low- and moderate-income (LMI) and minority census tracts. These widely cited reports found that, in different regions of the country from Los Angeles to Detroit to Buffalo, there has been a pronounced decrease in both the number and dollar amount of small business loans in LMI and minority census tracts. “What really got to us was hearing the stories of folks who had turned to non-bank online lenders with really high costs and complex terms and got trapped in debt just like consumers who get trapped by payday loans,” says Dory.
 
It is these concerns about high-cost lending that led Woodstock to engage with the Responsible Business Lending Coalition and, ultimately, sign the Small Business Borrowers Bill of Rights (the Rights). “Our friends at ACCION Chicago looped us in and that’s where we met Opportunity Fund, Small Business Majority, and some of the financial technology firms (fintechs) like Lending Club,” says Dory. “I thought it was really positive that people were trying to set a higher standard for fair small business lending.”
 
Dory also noted the ripple effect that the Rights have had on the small business lending industry as a whole: “I saw a pretty quick evolution in how other members of the fintech industry looked at their own practices…. Early conversations with some of the high-cost fintech lenders were pretty one-sided when we brought up APR disclosures and ability-to-repay standards. The Rights have forced some of these groups, even if they are not signatories, to change their practices and start providing better disclosures.”
 
This positive momentum is made possible, in part, by groups such as Woodstock Institute, whose research and policy work moves the small business lending industry in a more equitable and transparent direction.
 
We thank Woodstock Institute for taking the time to talk with us about its research and the importance of the Small Business Borrower’s Bill of Rights in the small business lending industry. 
 
If you are interested in learning more about the Small Business Borrower’s Bill of Rights please email info@borrowersbillofrights.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrower’s Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.
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Gabriel Villarreal of Opportunity Fund (a Small Business Borrowers’ Bill of Rights founder) sat down with Levi King, Co-Founder and CEO of Nav. The organization has been a Signatory of the BBoR since its founding in 2015.
 
Nav Co-Founder and CEO, Levi King, understands at a very personal level the importance of access to affordable, transparent credit. “I started and successfully sold five small businesses in my twenties in the restaurant, hotel, and manufacturing spaces,” says Levi. “As a serial small business owner I had to deal with the nuances of getting loans. I got all different types of commercial financing from SBA loans to commercial credit cards to equipment leases.” After several frustrating experiences trying to access financing, Levi decided to do something about the dearth of capital access. The result is Nav.com.
 
Started by Levi and his cofounder Caton Hanson in 2012, Nav.com and its mobile app gives small business owners free access to easy-to-read personal and business credit reports and monitoring all in one spot. It also provides tools to build business credit and analyze cash flow, and a marketplace that matches users to lending options based on their approval odds. This all makes it much easier for business owners to get affordable funding, lower their costs and save time. Nav’s guiding principles in doing this are complete transparency and efficacy. “Our goal,” says Levi, is to help you understand, improve, protect, and take advantage of your credit and financial data so we can bring transparency to B to B commerce and lending.”
 
This focus on transparency in financing and credit monitoring stems from Levi’s experiences as an entrepreneur, “As a small business owner I’ve lived the pain of trying to figure out complicated financing documents,” states Levi. “If you don’t have that experience, it’s east to just say, ‘These borrowers will figure it out. Surely, they know what they’re doing!’ but the truth is that they don’t.”
 
Compounding the confusion that can accompany obtaining financing is the spread of new financial products and technologies geared towards small business owners.  Since the financial crisis of 2008, Levi has seen both positive and negative growth in the commercial lending space. On the positive side, technological innovation has expanded capital access with new products and reduced time to funding. In the flip side, the transparency and consumer protection issues that have always challenged the industry have also scaled up. These trends are reflected in the experiences of Nav’s clients such as Leticia Giron, owner of Belleza and Beauty.
 
Belleza and Beauty is a wholesaler of beauty equipment that sells to spa owners, doctors, and distributors. After running a successful business with robust revenue streams for 21 years, getting an SBA or bank loan should have been within easy reach for an entrepreneur like Leticia. Having had trouble accessing affordable business credit, Leticia used her savings and personal credit cards to finance her business. Things came to a head when her main vendor increased his prices and started marketing at the same trade shows where she would sell her wares. She needed to diversify her product lines and expand her business online but couldn’t find the financing.
 
So, Leticia signed up for Nav. Once she logged on she saw that both her personal and commercial credit scores showed late-payments and negative marks which had been taken care of a long time ago. “Through their Nav portal,” says Levi, “our customers can dispute negative credit marks and get issues taken care of all in one place.” With the assistance of Nav, she was able to take access an SBA loan and finally get the credit she needed to expand her business.
 
Nav has built its own success on the success of the small business owners it serves. This absolute commitment to transparency and responsible capital access is what makes them a Signatory of the Small Business Borrowers Bill of Rights.
 
We thank Nav for taking the time to talk with us about their business development work and the importance of the Small Business Borrowers’ Bill of Rights in the small business lending Industry. 
 
If you are interested in learning more about the Small Business Borrowers’ Bill of Rights please email info@borrowersbillofrights.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrowers’ Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.

Gabriel Villarreal of Opportunity Fund (a Small Business Borrowers’ Bill of Rights founder) sat down with Clarinda Landeros, Associate Director of Policy, for the National Association for Latino Community Asset Builders (NALCAB). The organization became an Endorser of the Rights just last month (March 2018).
 
Clarinda Landeros, a seasoned policy expert who spent time working on small business policy with the House Small Business Committee, is passionate about the growth of Latino-owned businesses in the United States, “You can’t have a conversation about asset building and improving economic trajectories in the Latino community without talking entrepreneurship,” she says. “That’s why I joined NALCAB.”
 
Recognizing a dearth of capital access and wealth building tools within the Latino community nationwide, a group of community and economic development leaders representing rural and urban Latino communities gathered in 2002 to identify ways to address these challenges. This group would become NALCAB, a coalition of more than 100 community-based organizations with a mission to build assets for Latino families, communities and organizations, and advance economic mobility for low and moderate-income people.
 
With small businesses accounting for two thirds of new jobs created in today’s economy, the expansion of Latino-owned small businesses is a major economic force. Recognizing this, one of NALCAB’s many initiatives is to support the development of Latino entrepreneurship, “Entrepreneurship is a way to take a hold of the American Dream,” says Clarinda. “Small business ownership spurs innovation and creates jobs. Latinos are starting businesses in great numbers, this is good for the economy and good for asset building within the Latino community.”
 
NALCAB supports small business development by offering support grants to its members. Some of these services include CDFI certification and loan fund capitalization, the technical assistance and lending best practices, as well as the development of key performance indicators.
 
“Access to capital and technical assistance are two of the biggest challenges facing Latino entrepreneurs,” says Clarinda, “How to write a business plan, accessing capital, compliance costs -  these are just some of the challenges startups face in getting their business off the ground .” Cultural barriers like language can also scale up challenges for new business owners, “Culturally relevant and sensitive technical assistance, materials offered in Spanish… It’s getting better but the challenge is still there.” 
 
These challenges are why NALCAB endorsed the Small Business Borrowers’ Bill of Rights, “When you look at the incredible start-up and growth numbers of Latino-owned small businesses and compare them to the lending numbers, you see that there is still a huge gap between Latino-owned businesses and their counterparts,” says Clarinda. This gap in capital access from mainstream financial institutions, she notes, can cause these business owners to seek financing from high-cost, short-term lenders, which can threaten the businesses’ long-term viability.
 
“Giving our community a guideline, something that shows people how to recognize responsible lending products, can make all of the difference between a business taking out an unaffordable loan and a responsible loan that helps them grow,” says Clarinda. For a new small business, that distinction is vitally important.
 
We thank NALCAB for taking the time to talk with us about their business development work and the importance of the Small Business Borrowers’ Bill of Rights for small business owners 
 
If you are interested in learning more about the Small Business Borrowers’ Bill of Rights please email info@borrowersbillofrights.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrowers’ Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.
 

Gabriel Villarreal of Opportunity Fund (a Small Business Borrowers’ Bill of Rights founder) sat down with Wendy K. Baumann, President/CVO of the Wisconsin Women’s Business Initiative Corporation (WWBIC). The organization has been a signatory of the BBoR since 2016.
 
The Wisconsin Women’s Business Initiative Corporation (WWBIC) has been part of the community and economic development space in the Midwest for over thirty years. The organization got its start by focusing on and supporting women-owned businesses, and since then it has expanded the scope of its mission to serving all underserved entrepreneurs, “…who face barriers in accessing traditional financing or resources in pursuit of their dreams and economic well-being.”
 
In this drive to serve their community, WWBIC is undoubtedly succeeding. Since its start in 1987, WWBIC has loaned out more than $60 million to small business owners, created and retained nearly ten-thousand jobs in Wisconsin, and supported more than fifty-five thousand clients. As WWBIC’s President for more than 24 years, Wendy Baumann has seen this growth and success first-hand. “We came out of the women’s economic empowerment movement and we came out of the microlending movement,” says Wendy, “From day one we were providing quality business education coupled with fair and responsible capital.” This was something unique about WWBIC at the time, as many organizations focused on either providing capital or providing business development support. “The focus remains on where there is an unlevel playing field and where we see inequity,” says Wendy. New growth initiatives also encompass veteran-owned small business and families as well as citizens re-entering society from incarceration. “Our focus is and really has been women, minorities, and lower-wealth individuals.”
 
Expanding its breadth and reach is WWBIC’s next big step, growing to encompass not just urban centers like Milwaukee, Madison, Racine, and Kenosha, but large swathes of Wisconsin’s rural communities as well with four offices all across the state. “About 25% of our clients are rural,” says Wendy, and they have plans to increase this expansion. “There’s not a lot of folks lending and operating in rural communities. We also offer our trainings and materials in Spanish so we’re reaching another hugely underserved market there.” WWBIC has also seen the potential for technology to transform the way that they can deliver high quality technical support to their clients, “We do place-based trainings, classes with a facilitator and a peer-to-peer connection, because those in-person community connections are so important. But we’ve also expanded to online and on-demand services to fit the needs of busy entrepreneurs. Through our online portals we offer classes and units in marketing and business planning, and then we pair that with in-person counseling to fit the specific needs of our clients.”
 
In terms of supporting the Small Business Borrower’s Bill of Rights (BBoR), Wendy had this to say, “Immediately I really just loved the concept of a Bill of Rights. It’s something that can withstand the test of time and people can understand it from many different perspectives.” The versatility of the BBoR as a platform for further change also spoke to her, “From public funding sources, private funding sources, to the businesses themselves, these are the rights we need to preserve around access to capital and for small business owners. I think it can hold the industry together, it’s a rallying piece that can be used in numerous positive ways.”
 
For over 30 years WWBIC has served the underserved in the state of Wisconsin, embodying the spirit and the principles of the BBoR in its drive to support small business owners and allow the small business economy to thrive.
We thank WWBIC for taking the time to talk with us about their business development work and the importance of the Small Business Borrowers’ Bill of Rights in the small business lending Industry. 
 
If you are interested in learning more about the Small Business Borrowers’ Bill of Rights please email info@borrowersbillofrights.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrowers’ Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.

Gabriel Villarreal of Opportunity Fund (a Small Business Borrowers’ Bill of Rights founder) sat down with Ron Fong, Executive Director of the Asian Pacific Islander Small Business Program (APISBP). The organization was an original endorser of the BBoR.
 
In Los Angeles, the vitality of the small business economy is intertwined with its history of robust immigration. At the intersection of several different Asian-ethnic enclaves in downtown LA, you will find the Asian Pacific Islander Small Business Program (APISBP). Founded in 1999 as a collaborative of five community organizations -- the Chinatown Service Center, Koreatown Youth & Community Center, Little Tokyo Service Center CDC, Search to Involve Pilipino Americans, and the Thai Community Development Center -- APISBP seeks to assist the development of small and micro businesses in LA with a particular focus on the Chinese, Korean, Japanese, Thai and Filipino business communities, with a special focus on low-income immigrants.
 
Ron Fong, APISBP’s Executive Director, came on board in 2010, continuing the organization’s mission of serving Asian and Pacific Islander (API) small business owners. The organization focuses specifically on technical assistance and business development, capitalizing on the cultural knowledge of each of APISBP’s partner organizations. “Our business counselors are based within our partner organizations so they can focus their work on a particular community,” says Ron, “For example, in Koreatown we have a Korean speaking business councilor at KYCC who can provide culturally and linguistically appropriate business assistance within easy access to main ethnic commercial corridors.” This kind of tailored support is available in each of the ethnic enclaves that APISBP serves.
 
In terms of why these services are essential, “A lot of these folks come here to learn a business and start their own business. That’s how these families and these communities pursue their dreams and accumulate wealth, taking advantage of opportunities that might not be available in their home countries. That takes entrepreneurship,” states Ron. “However, an overriding need is overcoming language barriers. It’s not unusual for a bank or public agency to put communications out in Spanish or Chinese, but you rarely see anything available in Japanese or Thai. It’s being able to help our clients overcome those linguistic and cultural barriers in order to start and grow their businesses.”
 
Different API communities also often have specific knowledge about a particular business type. “In LA County,” says Ron, “about 80% of the donut shops are Cambodian-owned.” This allows these communities to support each other, raise capital, and teach new immigrant members how to support themselves and their families via these specific businesses, “Knowledge in specific sectors can be very high, which lowers barriers to entry” says Ron. However, even with this knowledge and the business development support that APISBP offers, API small business owners still face barriers in accessing responsible business credit, some communities even going so far as to start their own community banks in order to source capital. While APISBP works with several small business lenders, “Access to capital is still a huge issue,” says Ron, some difficulties have arisen with online lending. “Some of our clients, like other small business owners, find it challenging to gather all their materials, sit down with a banker, and then wait weeks for a response.” This has led some of their clients to take out loans from high-cost online lenders who offer financing in unfamiliar terms with extremely high interest rates.
 
To Ron, this is the necessity of the Small Business Borrower’s Bill of Rights, “Just imagine having to deal with any kind of loan docs if you don’t even understand that language. We’ve always felt that there needed to be greater clarity and transparency around the lending process, so the Borrower’s Bill of Rights is just a natural for us to support.” 
 
We thank APISBP for taking the time to talk with us about their business development work and the importance of the Small Business Borrowers’ Bill of Rights in the small business lending Industry. 
 
If you are interested in learning more about the Small Business Borrowers’ Bill of Rights please email info@borrowersbillofrights.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrowers’ Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.
​

Access Plus Capital is a Community Development Financial Institution (CDFI) serving Central California's small businesses through a variety of financial products and services from start-up funds for entrepreneurs, to loans up to $500,000 for more established businesses. With offices in Fresno and Bakersfield, they have a mission to create economic opportunities and build wealth in the low- and moderate-income communities they serve.
 
The diversity of the Central Valley is driven by global trends in immigration that have occurred over centuries. Recently, migrant farmworkers from Latin America have put down roots here as have refugees from civil wars and political instability in Southeast Asia. Despite a robust agricultural sector, the region has historically seen a lack of economic investments by private funders and foundations in comparison to the areas it is sandwiched between, Los and Angeles and the San Francisco Bay Area. All of these structural factors, intersecting with lower levels of formal education  have  created barriers to wealth accumulation and economic prosperity for many Central Valley communities.
 
“The income gap gets a lot of attention,” says Jeremy Hofer, Director of Operations, “but we see the wealth gap as an even deeper issue. You might have a family that is considered middle class in terms of income but deeply in the red in terms of wealth. If we’re really about fighting poverty we need to address the inequality in how wealth is distributed. We do this by helping entrepreneurs build small businesses. By supporting job creation and entrepreneurship, we hope to increase income and wealth. Whether it’s providing a referral or working with our borrowers on their marketing or financials, we try to meet them where they are at.” Access Plus Capital also sponsors trainings and workshops from one end of the 450 mile long valley to the other.
 
Access Plus Capital's business services are tailored to support low-moderate income small business owners and signing on to the Small Business Borrower’s Bill of Rights (BBoR) was an easy step. “It was a no-brainer,” stated Jeremy. “Whether we had the policy or not, we found we were following the principles of the BBoR already. It’s just the right thing to do.”
 
In terms of advancing fair lending practices in the small business lending industry Jeremy had this to say, “Strengthening disclosures in the online lending field is something that is needed. We do a lot of refinancing work with people who are uncertain of the true cost of the capital that they took out. There needs to be more credit education out there because financing a business can be tough to navigate, especially during a crisis moment.” In addition to disclosures, ethical standards for collections practices are a necessary component of fair lending. “A big part of lending is collections,” says Jeremy, “It’s not just about transparency in fees and getting out the money, it’s around fair treatment of borrowers and making sure that third-party collectors are in the same ethical space as we are. We try to be compassionate with our borrowers' circumstance and work side by side with them over time, not just at the time of the sale. We think this should be standard practice for the industry.”

We thank Access Plus Capital for taking the time to talk with us about the importance of the Small Business Borrowers’ Bill of Rights in the small business lending Industry. 
 
If you are interested in learning more about the Small Business Borrowers’ Bill of Rights please email info@responsiblebusinesslending.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrowers’ Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.

Gabriel Villarreal of Opportunity Fund (a Small Business Borrowers’ Bill of Rights founder) sat down with Brian Pifer, Vice President of Entrepreneurship, with Small Business Majority. The organization is a founder of the Small Business Borrowers’ Bill of Rights and have been endorsers since the BBoR launched in 2015.  
 
Small Business Majority got its start in 2005 under the leadership of its Founder & CEO, John Arensmeyer, as a network of small businesses concerned about policy issues affecting small business owners. Since then it has since grown into a nationally-recognized small business advocacy organization, working in 10 cities across the country, and expanded its scope to encompass not just policy work, but research, education, training and resources for small business owners as well. At its core, Small Business Majority believes in the power of entrepreneurs: “Small business entrepreneurship is a proven pathway for Americans from all walks of life to build income, independence and financial security for themselves, their families and their employees. If provided the proper resources and public policies to unleash their potential, they inject life and vitality into communities, provide quality jobs and boost prosperity for all.”[1]
 
Their initial policy engagements with issues like healthcare reform led them to recognize other challenges facing small business owners, such as access to capital, and launch its Entrepreneurship Program in 2015 to provide education and resources to underserved small business owners. “We see ourselves as bolstering the capacity of lenders and other organizations working in the lending space,” says Brian. “It’s a hub and spoke model where we are involved with different organizations all over the country, small businesses, chambers of commerce, lenders, and technical assistance providers in varying capacities. This allows us to make connections between different organizations that can support each other and better serve small businesses.”
 
Small Business Majority’s direct connection to the small business community allows them to be responsive to the needs of small business owners, building policy platforms and providing resources informed by the needs of its partner organizations. This is what led them to become a founding member of the Responsible Business Lending Coalition (RBLC) and a lead endorser of the Small Business Borrowers’ Bill of Rights in 2015. “What we’ve been hearing consistently from our network on the ground, and chiefly across the board, is that accessing capital is a key issue for all small business owners and especially underserved entrepreneurs, “says Brian. “Because underserved business communities lack access to capital through traditional methods, many small business owners end up taking on high-cost credit products. The question we try and help them answer is ‘Where are the responsible lenders that can help them access the capital they need at fair rates so they can grow their businesses?”
 
In talking about online lending, Brian takes an optimistic view: “There is a lot of promise in the online lending space and a lot of access there. That’s why we helped write and endorsed the Borrowers’ Bill of Rights, so that we could help small business owners make informed decisions in a fair and transparent marketplace.”
 
To this end, Small Business Majority also regularly publishes research on the small business lending industry highlighting various issues, including research on access to capital and online lending. A recently released survey of over 500 small business owners indicated that 80% of small business owners believe online lenders should be regulated and furthermore, that 74% see predatory lending as a major problem facing themselves and the industry.
 
“When you get 80% of folks agreeing that something is an issue, it’s probably something you should take a look at,” says Brian about the results of the study. “Small business owners are aware that this is a challenge, and I think that’s pretty telling. But… that’s why we joined the RBLC and that’s why we support the Rights. Our hope is that these Rights can be an avenue for advocacy and be an inroad towards ensuring policymakers are aware of these issues. We want to work towards a solution where products are offered responsibly, and small businesses can thrive.”
 
We thank Small Business Majority for taking the time to talk with us about their advocacy work and the importance of the Small Business Borrowers’ Bill of Rights in the small business lending Industry. 
 
If you are interested in learning more about the Small Business Borrowers’ Bill of Rights please email info@responsiblebusinesslending.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrowers’ Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.
 
 
 


[1] http://www.smallbusinessmajority.org/about-us

Gabriel Villarreal of Opportunity Fund (a Small Business borrower’s Bill of Rights founder) sat down with Joe Silver, Vice President of Finance, with the Seattle-based small business lender Lighter Capital. The company has been a signatory of the Small Business Borrowers Bill of Rights since the beginning of 2017. 
 
Lighter Capital is a small business lender that provides revenue-based financing to early-stage tech companies. Founded by Andy Sack in 2010, their mission is to “…revolutionize the business of startup finance and help founders maintain control of their companies — and their destinies.”
 
As I talked with Silver, it became apparent that Lighter Capital is focused not only on providing financing but also partnering with entrepreneurs to help fulfill their visions.
 
Lighter Capital got its start when entrepreneur and investor Andy Sack decided to take on an obstacle he'd faced himself as a founder of an early-stage tech company: access to capital for growth.  
 
After Sack encountered this challenge several times, according to Silver, “The lightbulb for the idea of Lighter Capital went off. It’s very difficult to raise bank debt as an early stage company. It’s also extremely tough to raise equity, and it’s not fun to sell part of your ownership.”
 
After tinkering with a couple of different financing models early on, Lighter began to scale its revenue-based financing model in 2012. Their purpose? “To serve entrepreneurs and provide innovative solutions so that they can grow their companies.” Revenue-based financing, or RBF, has been Lighter’s primary offering for the past five years.
 
When asked about their focus on providing funding to tech companies, Silver noted, “That’s where Andy and BJ, our current CEO, started and it’s what we truly care about. Our unique revenue-based financing product is a great fit for tech companies with sticky revenue streams, high gross margins, and a steady growth trajectory.”
 
Silver discussed some of the difficulties early-stage tech companies often face when seeking growth capital. “They can’t get bank debt because they’re very asset-light… they might not have a track record so they couldn’t go their local bank, or [the loan] might even have a personal guarantee, which they might not like.”
 
According to Silver, the narrative around financing and angel investors infusing major amounts of cash into a start-up destined for greatness is usually a false one. “We always hear these romantic stories around startups raising equity,” he said, “But that’s really, really hard; only .001% of entrepreneurs can do it.”
 
Revenue-based financing is based on a company’s performance which, especially for start-ups, can vary widely. With RBF, a company agrees to share a percentage of future revenue with an investor in exchange for capital up front. The loan payments are tied to monthly revenue, going up for strong-revenue months and down for low-revenue months. This allows companies to make small payments as they start out and larger payments as their businesses grow.
 
“This [RBF] was the product from the get-go,” said Silver. “As a royalty agreement structure, we have flexible payments. Companies repay us based on a pre-determined amount, say 3% or 5% [of monthly inflows], it fluctuates with their revenue. That type of flexibility is what we feel truly aligns us with entrepreneurs.”
 
“We’re in this together. We know the risk we’re taking and we can price our offerings accordingly. If the company grows very quickly we get repaid sooner, great. And if they’re slugging it out, we’re right there with them, too. They don’t owe us any more than they would have [on a traditional term loan].”
 
Lighter Capital has successfully completed 300+ financings for nearly 200 companies and continues to grow, in large part due to something Silver calls the company’s “secret sauce” – the unique modeling of a company’s growth path.
 
“We model out their future revenue over the life of the proposed loan,” he said. “We determine what a company’s future growth is going to look like and that’s how we figure out what percent of monthly revenue we need to be fully repaid.”
 
To raise equity, many of the entrepreneurs running tech startup companies would otherwise have to give up controlling shares of their own businesses to VCs or other investors. Lighter Capital provides another, more flexible option to help tech startups scale.
 
“The best scenario for us is when the company can achieve their growth goals and run the business the way they want to run it,” noted Silver. Lighter Capital stands with small businesses.
 
For Lighter Capital, developing the RBF model was not without its own challenges. Determining the APR for a credit product with a flexible repayment schedule can be complex. The company discloses APR to potential borrowers similar to a traditional term loan offering assuming a set monthly repayment. In this way, borrowers have a side-by-side comparison with other lending products. The company also provides a range of possible APRs depending on the speed of repayment.
 
Lighter Capital’s team has decades of tech startup, underwriting, and financial industry experience, so they’re able to provide mentorship and community to benefit their clients. The company has been interested in the Small Business Borrower’s Bill of Rights (BBoR) for a long time. When Lighter Capital Investor and BBoR leader Community Investment Management (CIM) asked if they would become signatories, they immediately said yes.
 
“It just makes sense,” said Silver. “Transparency, clear pricing … we were already doing all of those things, so this [signing the BBoR] was a no-brainer. This is how our business is built.”
 
Lighter Capital provides innovative financing for innovative companies. It does this with honesty, transparency, and a firm belief that entrepreneurs should run their businesses the way they want.
 
Thanks to Lighter Capital for taking time to talk with us about their business model and the importance of the Small Business Borrower’s Bill of Rights in the small business lending industry.
 
If you are interested in learning more about the Small Business Borrower’s Bill of Rights, please email info@responsiblebusinesslending.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrower’s Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.

Gabriel Villarreal of Opportunity Fund (a Small Business Borrower’s Bill of Rights founder) got the chance to sit down with Lisa Mensah, President and CEO of Opportunity Finance Network. OFN has been a signatory of the Small Business Borrowers Bill of Rights (BBoR) since 2017. 
 
Opportunity Finance Network (OFN) has been one of the nation’s leading associations of Community Development Financial Institutions (CDFIs) since 1984. Small business support and small business lending is a large part of what CDFIs do - about 60% of the nation’s CDFIs provide loans to small businesses. Responsible for coordinating nation-wide initiatives on behalf of its member CDFIs, OFN, “shapes policy, conducts research, and creates partnership and programs that help our Members deliver high impact in financially stressed communities.” Lisa Mensah joined the organization as its new President and CEO in March 2017. As former Under Secretary of Agriculture for Rural Development and as former founding Executive Director of the Aspen Institute’s Initiative on Financial Security, Lisa has a deep understanding of the challenges facing both urban and rural communities in terms of access to capital and lack of long-term sustainable investments
 
When it comes to the importance of small businesses in the larger society, Lisa sees small businesses not just as fantastic drivers of job creation but also as vibrant and essential contributors to social mobility. “Many of us will at some point work for a small business and for some of us, small business generates personal wealth and assets. Not every business succeeds that way but that’s a big chunk of the American Dream. It’s the ability to create a business that can employ your neighbors, provide a service that consumers want, and that allows you to provide for you, your family, and the next generation.”
 
CDFIs play a critical role in supporting the small business community. Lisa goes on to say that, “…we have been gap fillers… one of the important roles that CDFIs have played in small business lending is the ‘Capital-plus’, and it’s the -plus side that many of our CDFIs do. It’s added technical support, added time, things that make the financing work. That’s a special part of the sauce that CDFIs bring to small businesses.”
 
When it comes to the small business lending market, Lisa acknowledges that there are major challenges that small business owners face. As access to capital has become constrained from larger financial institutions, innovation has driven the development of new financial solutions in the form of easy to access capital from alternative lenders, some of which comes at a very high cost. As a response, OFN developed the platform Venturize as both an educational and business planning tool. With Venturize, small business owners can learn about different types of business loans conventionally available and find the products that match well with their needs and credit capacity.
 
Lisa underlines the importance of the Small Business Borrower’s Bill of Rights (BBoR), “For the business owner, sure there are more options… this doesn’t always mean that you will be in a better place with this financing. We really do need this Borrower’s Bill of Rights so that people can find fair lenders and those of us that are fair lenders can be more competitive within this market…”
 
This dedication to fairness and transparency translates not only in OFN’s support of the BBOR and its CDFI members, but in its challenge to the CDFI and small business lending industry to keep growing and providing financial support for everyday Americans.
 
As OFN’s new President and CEO, Lisa’s dedication to small businesses and the people that run them is clear. “Our conviction,” she states, “is that within a changing world, what’s important is not whether you get your loan from a credit union or a community bank or an online lender, but whether you got a product that as a business owner works for you. And that’s what this Bill of Rights calls for.”
 
We thank Opportunity Finance Network for taking the time to talk with us about their work with CDFIs and the importance of the Small Business Borrower’s Bill of Rights in the small business lending Industry. 
 
If you are interested in learning more about the Small Business Borrower’s Bill of Rights please email info@responsiblebusinesslending.org.
 
If your organization is currently a signatory or endorser of the Small Business Borrower’s Bill of Rights and would like to be featured in our blog, please contact Gabriel at Gabriel@opportunityfund.org.
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