Lendistry, a non-bank lender for small businesses, has expanded its offerings to include home mortgages.
The Downtown Los Angeles-based lender has launched Lendistry Home Loans, a division to provide home loans to underserved communities in California, Georgia, Illinois, Maryland, Pennsylvania and Texas, the Los Angeles Business Journal reported.
The company expects to have $300 million in funded loans available next year.
Founded in 2015, Lendistry has distributed over $4 billion in pandemic relief funds to small businesses and has partnered with Amazon.com to support its small sellers.
Executives say Lendistry Home Loans will help fulfill the company’s mission of expanding access to capital and closing the wealth gap through credit and easily accessible financial literacy content.
“This is about wealth building, and home ownership is historically one of the biggest ways to build wealth,” Lendistry CEO Everett Sands told the Business Journal. “Small business and home ownership, at least from my perspective, when it comes to helping people build wealth — that’s what we’re really interested in.”
Lendistry Home Loans plans to offer both conforming loans of just over $1 million and non-conforming loans of approximately $3 million.
The company takes into account a person’s financial situation and determines the program that is best suited to pave the path to homeownership.
The company plans to offer traditional purchase and refinance loans, as well as several options for non-traditional borrowers, including reduced-interest refinance loans from the Federal Housing Administration and the Department of Veterans Affairs.
Lendistry Home Loans states that FICO, a credit scoring model, is not a determining factor in whether someone gets a loan, but a minimum credit score of 620 is required.
“Every loan comes with risk,” Sands told the Business Journal. “Based on our experience with corporate lending and observing the ability of small business owners to repay the loans they make to Lendistry, we have a good understanding of the risk associated with undercapitalized communities.”
He said the company is building a network of counselors recognized by the Community Development Financial Institutions Fund and the U.S. Department of Housing and Urban Development who can help if borrowers run into financial difficulties.
Moussa Diop, an associate professor of real estate at USC, said that since the 2008 financial crisis, non-bank fintech lenders have increasingly expanded their mortgage loan offerings, making the process easier and more convenient for borrowers because of their online presence.
Diop said Lendistry Home Loans’ model is not much different from traditional lending practices, but pointed to differences between small business loans and mortgage loans.
Small business lenders are more likely to keep the loans on their books and remain committed to them, Diop said. But with mortgage loans, the lender must sell them at a profit, limiting its ability to reduce mortgage costs for borrowers.
“The real benefit for these communities is that they have someone to talk to who can really help them access programs that they didn’t know about. That could be very valuable,” Diop told the Business Journal.
Lendistry, one of the nation’s largest nonbank lenders by number of loans approved, approved 783 loans totaling $127.3 million this year, up from 110 loan approvals totaling $56.6 million last year, according to the Small Business Administration.
— Dana Bartholomew
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