Industry Profile – Everett K. Sands
CEO & President, Lendistry
Everett K. Sands, CEO & President of California-based small business lender Lendistry has been in the lending business for over 18 years. “I started out at a small brokerage firm and then ended up just being lucky,” he says. However, after hearing his story, it would be difficult to attribute his success and meteoric rise through the lending world to merely luck. As the saying goes, diligence is the mother of good luck.
In his early twenties, Sands owned and managed a small mortgage company. One day, a local community bank reached out to him for advice on selling some mortgages on the secondary market, something he knew a lot about. “Call it young or dumb, flexible or agile, whatever you want to call it, but I took the bull by the horns and helped the bank out on a couple transactions,” says Sands. The president of the bank took notice of his talent and placed him on the board of the community bank at the ripe old age of 26, setting him on the path to continued success. Soon after, he sold his mortgage company to a different community bank, where he assumed the role of Vice President of Lending. Working full-time at a community bank provided him with invaluable experience, giving him exposure to government programs such as the Community Reinvestment Act, which he would later draw upon for Lendistry’s business model. He spent a few more years at the bank, helping them grow their lending business by 600%, when he realized that it was time for another opportunity.
Sands joined the consumer lending division of Wells Fargo in Washington, DC. Shortly thereafter, he received a call from the West Coast Head of Mortgages, and later mentor, saying, “Why don’t you come to California? You can learn under my wing, and I can help you grow to become one of Wells Fargo’s next superstars.” And that’s exactly what Sands did. Within a year in the Orange County, CA office, he had helped grow his team’s business from $150MM to $490MM, placing them in the top 1% of teams at the company and earning him copious accolades in the process. As a result, he was given the opportunity to join several committees, including interest rate risk, purchase strategy, marketing, and diversity inclusion to name a few. “You name it, I felt like I sat on it. That really got me around the bank. It got me to understand how Wells Fargo would act as a private label to institutions. It let me see how many different institutions we were involved with. It taught me about correspondent banking. I could see loan purchases. I really got to learn a whole lot,” he says.
Around the same time, Sands began to dabble with investing in alternative types of lending, mainly Merchant Cash Advances alongside a syndicate of investors. As a former underwriter, he found the emergence of technology-enabled alternative lending platforms to be very intriguing, given that he had cut his lending teeth by utilizing “kinda old-school, traditional” methods of underwriting. “We would put 100 to 200 pieces of paper on top the table and make a decision based on a predictive future analysis about whether or not this customer could pay on time,” he says. As a young, but very experienced lending professional, he always knew that there had to be a way to do things to speed up that entire process. “Fintech gave me that access to that information,” he says.
Shortly after that, Sands, along with several other colleagues, left Wells Fargo and decided to start Lendistry. “As soon as we created it, we realized it was a little like the Wild Wild West,” he says, referring to the stark contrast between fintech and the highly regulated and structured environment of the banking world. “We thought that it was great on one hand, because you have access to so many more things, but on the other hand, there are some good things about regulation, some good things about structure,” he says. Given this observation, he and his team set out to create a hybrid lending company, combining the best parts of the banking and fintech worlds or what Lendistry refers to as the “perfect formula.” Specifically, this means leveraging technology, responsible lending practices, and the investment capital of social impactors and national banks to help build a brighter future for small businesses.
With regard to technology, Lendistry relies on it to do three things – originate faster, underwrite better, and deliver a more personalized experience to customers. An online platform allows customers to easily input information and expedite a loan decision within 24 to 48 hours. Loan sizes range from $50,000 to $1,000,000 and experienced sales professionals are available to work with customers to help determine the appropriate loan size to fit their business needs, whether to finance equipment, inventory, or other working capital applications. Giving a customer too much capital can be often be as bad, if not worse, than not giving them enough.
No less important than technology is the concept of responsible lending, a core principle to Lendistry’s business. It refers to instituting processes that are designed to ensure sustainable and ethical business practices. Part of that means having multiple sources of capital in place. To accomplish that, Lendistry funds its loans through a network of private investors, including high net worth individuals, family offices, and smaller institutional investors. Sands hopes in the future to attract larger institutional players and banks as the platform scales. On the other side of the equation is borrower acquisition, which can often be a pain point and cost center for many lenders. Lendistry pursues a diversified set of acquisition channels, working with “higher-end” Independent Sales Organizations, such as commercial loan brokers, as well as affiliate partners to expand its reach and generate quality leads. Lendistry’s most reliable source to date has been banks who refer borrowers outside of their own credit box to Lendistry. Going forward, Sands sees organic search and direct origination as having tremendous potential, but those channels are still being built out. “Lastly, responsible lending also means having that ear to the customer, listening to what they have to say, what they want to do with their business, putting them on a pathway to success, and trying to find a financial product that meets that pathway to the best of its ability. Nothing’s perfect. But taking that one extra step means a big difference,” he says.
As a Community Development Financial Institution (CDFI), Lendistry’s ongoing mission is to provide economic opportunities and progressive growth for small business owners and their underserved communities, as a source of financing and financial education. One way in which they are able to do this is by leveraging federal and state loan guarantee programs to help add credit enhancement and collateral support to their customers. “We think what makes us unique versus some of the other lenders, is that we’ve taken the time to research these products, study these products, and figure out how to get these products into the hands of the small business owners,” he says. Moreover, Sands notes that it’s important to listen to customers and truly understand their business goals so that Lendistry can put them on the best path to success. “Nothing’s perfect. But taking that one extra step means a big difference,” he says. Education is also something Lendistry, and Sands personally, take very seriously, which is why they formed a partnership with The Center. Originally created to help minority small business owners, the nonprofit organization is committed to being a resource for low-to-moderate income small businesses, offering business coaching, networking opportunities, and educational workshops.
While Lendistry has come a long way in a short amount of time, Sands sees plenty of opportunity down the road to provide working capital to quality businesses who need it. He points out that prior to 2008 there were 25,000 community banks in the U.S. and now there are fewer than 6,000. “Smaller community banks, which represented 70% of the supply of small business lending in 2008 are gone with no foreseeable future to come back. I’m not saying that people won’t buy banks, won’t start banks, and things like that won’t happen. All I’m saying is that we won’t get to 25,000. Which means that if they were 70% supply of the market, which all indicators say that they were, there’s going to be a need, there’s going to be a void there. So I believe that small business lending and fintech lending, as it relates to small business lending, is here to stay,” he says.
Sands acknowledges that we’ll inevitably go through normal credit cycles and there will be some bumps along the way. “Interest rates will rise, credit will tighten, and the people who have built a sustainable business model are going to be here to stay. This is just old-school finance, right? So it’ll be interesting, I think, to see kind of how the next five years play themselves out.”