Durham Fintech LoanWell Powers Covid-19 Relief Fund For Entire State

LoanWell Co-Founders Justin Straight, left, and Bernard Worthy

There’s a lot of talk about PPP problems right now. But if the federal government fails you, maybe try looking for help a little closer to home.

The NC Rapid Recovery Loan Program launched March 24 as a partnership between the Golden LEAF Foundation and the NC Rural Center, as well as seven nonprofit lenders. Another group is also significantly contributing to the multi-million-dollar lending venture, though it’s not listed alongside the other organizations.

On the loan application page, the url bar gives a clue: The small addition of “.loanwell” links borrowers to the white-labelled LoanWell system, which is powering the entire NC Rapid Recovery effort. That little redirect is why co-founders Bernard Worthy and Justin Straight have been sacrificing sleep lately.

When GrepBeat last wrote about Durham’s LoanWell, it had just won an award for “Scrappiest Startup” from American Underground, the Durham tech hub where Worthy and Straight have been members since 2013 and have physically based the company since 2017.

LoanWell first launched as a DTC (direct to consumer) platform that enabled users to receive loans from community members in a crowdfunding-like feature. Now, Co-Founders Bernard Worthy (CEO and CTO) and Justin Straight (COO), who are also alumni of the Black Founders Exchange—co-sponsored by American Underground and Google For Startups—have pivoted LoanWell to a B2B software program for community lenders.

“It’s a big mission of ours to really be a part of the story, the local fabric of where we live, but wherever our customers are as well,” Worthy said. “We can help small businesses continue to grow, or to survive, or to thrive in their communities. And that leads to all kinds of things, from jobs to wealth creation, wealth generation.”

Fortuitous timing

LoanWell describes itself as the “Squarespace for Lenders.” It offers an automated loan origination and portfolio management software for community lenders—including banks, credit unions, CDFIs (Community Development Financial Institutions), loan funds, and foundations—through a white-labelled platform with end-to-end functionality for application intake, origination, task management, underwriting, closing, servicing and reporting.

Since the launch of NC Rapid Recovery, LoanWell has helped keep the program true to its name by helping lenders process loans at a rate of one every two minutes. The speed is necessary. For instance, the Golden LEAF Foundation—which manages the state’s 1999 windfall from settling lawsuits with the tobacco companies—initially allocated $15 million for the program; that entire amount was requested within 24 hours.

Thread Capital, the lending subsidiary of NC Rural Center and one partner in the recovery program, has worked most often in the past with loans related to hurricane recovery. Jonathan Brereton, the Executive Director of Thread Capital, says his team has looked at this crisis through a similar lens, though they didn’t know exactly what amount of demand they would face after a crisis that hit the whole state.

As of May 18, the program had received almost 6,000 loan applications, amounting to over $180 million. Thread Capital did six to nine months’ worth of work in one week when the program went live, and Brereton has hired 31 temp workers on top of the company’s six full-time staff in order to keep up with demand.

LoanWell started working with Thread Capital just a few weeks before the coronavirus pandemic began causing so much economic upheaval. Brereton credits LoanWell with making the NC Rapid Recovery loans possible.

“None of it would have been possible without their system,” Brereton said. “We were able to process thousands of applications. The system held up. Our old systems never would have made this possible, so the timing was incredibly fortuitous for us, that we had this in place.”

The L.A. Lakers before local bakers

The great need for community loans comes in part from shortfalls of loan programs funded by the federal government. Talk of “PPP” has been swirling around the small business world since March 27, when the U.S. Small Business Administration began implementing the “Paycheck Protection Program” as part of the more than $2 trillion economic relief package of the CARES Act.

But really, the NC Rapid Recovery program is more in line with the SBA’s Economic Injury Disaster Loan program, Brereton says. Traditionally, EIDC loans are made to help businesses recover from natural disasters, but they were recently expanded (with mixed results) to help companies deal with the effects of the pandemic. After the initial demand and success of the NC Rapid Recovery Act, the NC General Assembly contributed $125 million to the loan fund.

“This being state-funded, the goal is for this to go where the SBA does not,” Brereton said. “Some folks don’t qualify for SBA funding because of credit scores or any number of issues that make them ineligible for SBA funding. Our goal is to provide financing for those businesses, so to fill gaps that the federal dollars are leaving behind.”

Straight says that what happens many times is those who need relief the most don’t necessarily get it first. He said the “big flow” of the CARES Act was not flowing down to the community.

“By default, the retail banks that got the majority of the money to do that were prioritizing the companies that they made the most money out of,” Straight said. “The higher yield is where the money went. It’s why the L.A. Lakers got $4 million before ‘Main Street Bakery’ got a PPP loan.”

Worthy says they feel privileged to be able to help create the most affordable, accessible capital for the people who need it the most—including people they know by name who are hurting because of the crisis.

“Most importantly,” he said, “the reason why we got into this business is not just to build loan software. We could build anything. We can do a lot of different things. The reason was, we wanted to be shoulder-to-shoulder alongside small business in our community.”

About Elizabeth Moore 38 Articles
Elizabeth Moore tells the stories of the Triangle's tech startups as GrepBeat's summer intern. She is a rising junior at UNC Chapel Hill majoring in journalism and Spanish. You can contact Elizabeth on Twitter (@elizltmoore) and LinkedIn.