When you’re in the business of lending money, the last thing you want to do is run out of capital.
That’s exactly what happened early on to Bond Street, an online lender that crunches the numbers to determine how much to loan to small business owners.
“Last year, we didn’t have enough lending capital,” says Bond Street CEO David Haber. “We set up a little fund, and that money ran out quickly, so we had to convince larger investors to give us larger amounts of money.”
There was just one problem. Co-founders Haber and Peyton Sherwood had a background in technology and finance, but not in small business underwriting, making investors hesitant about opening up their wallets.
The game changer was hiring Jerry Weiss, a man in his late 50s who joined the team as its first employee. Not the usual hire for a startup, Weiss’ salt-and-pepper beard tells the story of his decades leading a risk management team at Citibank.
“After spending 30 years at a big bank, Jerry quit his job and came to my apartment building,” Haber says. “He’s older than my father, but he fits in incredibly well. It goes to show you shouldn’t be too inflexible about who you hire.”
Weiss’ levelheaded approach and industry experience got the team over many hurdles. For example, they’ve never had a company default on a loan.
“We realized if we were going to live and die by the quality of loans we provided, we had to do it right,” Haber says. “We spent a lot of time at places like Citibank, Amex, and Chase talking to people who did underwriting and risk management.”
Investors were apparently impressed. Bond Street finished a round of $110 million in equity and debt financing earlier this year and plans to raise more funds again next year. The company also recently partnered with WeWork to offer loans at discounted rates to its members.
What does Bond Street do, exactly? It gets small businesses approved for loans of $50,000 to $500,000 in less than a week. That same process could take several months at a traditional bank.
But that’s not all. Bond Street also informs clients what the numbers reveal about their companies and helps them with everything from improving their cash flow to upping their credit scores. This way, they hope to put more resources into the hands of business owners.
“We’re taking something that feels scary, opaque, and complicated for many people and distilling it down to something simple and human,” Haber says. “In the process, we’re connecting entrepreneurs to each other to help them collaborate and share advice and grow together.”
Photo credit: Lauren Kallen