♪♪ ♪♪ ♪♪ >> Everett Sands, the CEO of Lendistry, next on "The Chavis Chronicles."

>> Major funding for "The Chavis Chronicles" is provided by the following.

At Wells Fargo, diverse representation and perspectives, equity, and inclusion is critical to meeting the needs of our colleagues, customers, and communities.

We are focused on our commitment to diversity, equity, and inclusion, both inside our company and in the communities where we live and work.

Together, we want to make a tangible difference in people's lives and in our communities.

Wells Fargo -- the bank of doing.

American Petroleum Institute.

Through API's Energy Excellence Program, our members are committed to accelerating safety, environmental, and sustainability progress throughout the natural-gas and oil industry around the world.

Learn more at api.org/apienergyexcellence.

Reynolds American, dedicated to building a better tomorrow for our employees and communities.

Reynolds stands against racism and discrimination in all forms and is committed to building a more diverse and inclusive workplace.

At AARP, we are committed to ensuring your money, health, and happiness live as long as you do.

♪♪ ♪♪ >> We welcome to "The Chavis Chronicles" Everett Sands, the CEO of Lendistry.

Everett Sands, involved in the financial services industry.

>> I was drawn from -- After leaving boarding school, going to UPenn, I was drawn kind of into finance.

It's kind of native to Penn.

Most people end up in Wall Street, but I was a little bit more interested in finance.

>> Your parents went to Howard, but you went to UPenn?

>> Yeah, exactly.

>> That says a little something.

>> I'm a little bit of a rebel in the house.

My parents went to undergrad at Ohio State, but I liked Michigan.

Just so you kind of know, like, from the bat, I'm the guy that's trying to do something a little bit different.

>> Okay.

>> But the history of my family from Washington, D.C. is both my parents were entrepreneurs, in the law field, and the medical field, but my grandfather was a tailor in the 1930s.

>> In the 1930s?

>> The 1930s.

>> There weren't that many Black-owned businesses in D.C. in the 1930s.

>> There definitely weren't.

He's actually one of the -- He was one of the largest Black-owned businesses, and he also was the first to create an apprenticeship school.

Veterans were coming back from the war, and they needed to learn a trade.

And so they taught them the trade of tailoring.

He had five different locations in the city.

One is one block from here.

One is three blocks from here.

>> What was the business called?

>> The business was called JC Lofton's.

And so JC Lofton's tailoring shop was essentially, you know, prominent Congress members, vice presidents, others went through there.

But if you think about the 1930s, it was kind of like a modern-day barbershop or a salon, right?

So, this is a place where the community would go to get the knowledge about what was going on, have good conversation, and just have a safe space to have, you know, just that dialogue.

But he had about five different locations.

We had a house in Rock Creek Park.

And then he lost it.

And as a kid, I didn't really know.

Like, my parents didn't really tell me.

But I would ask questions like, "Well, why aren't we living in a house in Rock Creek Park versus, you know, living in an apartment, you know, on Taylor Street?"

And so, as I got a little bit older and got a little bit more mature, I realized what happened.

And what I realized is that he didn't really get the best financial and tax advice.

And so I kind of grew up with this story about "What if?"

You know, what if my grandfather had the right people around him?

And so that led me into finance, both my academic education and then also this desire to help my grandfather.

>> Well, you know, that's a great family story.

>> Mm.

>> And I think we always learn from our family history.

>> Yeah.

>> But you seem to be taking it a step further... >> Yeah.

>> ...not only awareness of whatever the challenges were in finance, but now you're in the finance community.

>> Yeah.

>> Tell us more about Lendistry.

>> After I left Penn, I ended up sitting on the board of the first African-American bank in Maryland.

Everybody on that board was 30 years my senior.

>> Okay.

>> And so spending a significant amount of time talking to people about what we didn't have and kind of financial structure, the opportunity to not have access to credit, really inspired in me, again, the same thing that was already kind of brewing from the situation with my grandfather.

>> Obviously, you've used your education to rethink the financial system.

>> Yeah.

>> And then find your own niche in the financial system.

>> That's right.

As a Black man and as a minority individual, you need to figure out where your foundation might be a little bit easier.

>> Did that hold you back, or was that a door opener?

>> I think it was both.

I think you had to have a mindset to leverage race, to use it as a unique opportunity.

The number-one way that I've used race is people underestimate my capabilities.

>> You know, you sound like Reginald F Lewis.

>> I know his story well.

>> He and I were very close, and he would tell me all the time -- You know, he was the first Black billionaire.

>> Yes, I know.

>> And I asked Reggie once, "Give me one word out of the English language that contributed to your financial success."

And he said, "Preparation."

>> Yeah.

>> Because the people he was dealing with underestimated his level of preparation.

>> That's right.

>> Underestimated his intelligence.

>> That's right.

>> Underestimated his >> Sophistication.

>> ...education at an HBCU, Virginia State University.

>> Yeah.

>> So, you leveraged all your development into founding your own business.

>> Yeah.

>> Tell us -- what is the mission of Lendistry?

>> Spending that time with community banks and then spending that time at the money center bank, one thing that was really interesting is that you start to see underserved and you start to see undercapitalized in a different way.

Coming out of 2008, we had made a decision in the banking industry that we were going to focus on operational efficiency.

That was a problem for me.

I would be in meetings and I would say, "Look, we've told everybody if they have a good credit score and they have a good income, then they can get a loan."

Well, after 2010, that became a lie.

And the lie was because you can go to a bank and their minimum loan amount could be $1 million.

And you don't know.

So you walk in there, and federal law requires a bank to give you an answer if you apply, good or bad.

So, you walk in there and you want $500,000.

You got an 800 credit score.

You got great income.

You get declined.

>> You get declined with an 800 credit score?

>> Yep.

>> Man.

>> Well, it's not right.

>> Exactly.

And that's the danger of operational efficiency in a bank.

Now, the truth is, every business has operational efficiency.

You call up a lawyer, you say, "I got a $5,000 case," and they're used to working on $500,000 cases.

They don't take your case.

That's just the way it goes.

But if you get the benefit of FDIC insurance, and you get the benefit of leverage from the Federal Reserve, you're supposed to help your community.

So, the answer to your question is Lendistry helps underserved and undercapitalized communities.

>> Well, I thought there was a rule for banks -- Community Reinvestment Act.

>> There is a rule.

>> That by law, these banks are supposed to invest in the communities where they're located.

>> They do.

But that doesn't mean you get a loan.

>> Okay.

You're the expert.

>> I'm just telling you how it works.

That's how it goes.

>> There's some mythology about banking.

>> That's right.

>> There's some mythology about finance.

>> That's right.

>> Mythology about private equity.

>> That's right.

>> You seem to demystify it... >> That's the goal >> ...in your own career.

>> That's right.

>> So, tell us about, first of all, how important it is to get a good financial-based education... >> Yeah.

>> ...if you want to get into that marketplace.

>> So, I think the first thing for the audience and for everybody, there's three questions you always got to ask.

And I don't care if it's banks.

I don't care if it's private equity.

You just got to ask.

>> Okay.

>> And the reason why is 'cause there's no sign on the door.

Like -- And what happens is people learn by doing.

I'll give you a classic example.

If we went to Dunkin' Donuts right now, you would know that they sell doughnuts and coffee.

But why don't you walk into Dunkin' Donuts ask for a cheeseburger?

It's 'cause you've been in there before, right?

And you actually ask the questions.

You look at the menu.

>> Right.

>> Banks don't have menus.

So the three questions people always have to ask is -- do you actually serve my loan amount?

Right?

So, I just mentioned, you walk in there, the minimum loan amount is $1 million, and you ask for $500,000.

Doesn't mean you're a bad customer.

You just didn't ask the question before the application.

The second is, do you do my use of proceeds?

Some banks are boat lenders.

And you walk in there asking for a home loan.

The moment you take an application, they're required by law to give you an answer.

But they do boats, right?

There's no sign on the door that says "Only boats."

And to your point, we assume that banks do all things for all people at all amounts, and that's not true.

>> So, next time I go to a bank, I'm gonna say, >> You can say, "Let me see your menu."

And the third one is, do you finance me?

And I don't literally mean like personal me, Black men or anything.

I'm not saying that.

Nonprofit, for-profit, the type of business that you are.

You got to ask that question because, again, they might not, you know, finance that type of business.

And so you got to ask for the menu.

>> Well, you know, you're breaking it down so practically.

>> Mm-hmm.

>> Unless the viewers had an opportunity to see you on "The Chavis Chronicles"... >> Yeah.

>> ...most Americans wouldn't know anything about those three questions.

>> That's right.

>> Would know what to ask a banker, particularly if you're in business.

>> Yeah.

>> You know, you would assume a person in business knows finance.

>> Yeah.

>> But in a lot of our communities, they are in business, but they don't know the financial world, how to leverage... >> That's right.

>> ...whatever assets they have.

>> That's right.

liabilities they may be facing.

>> That's right.

I mean, in 1994, the Treasury created something called a Community Development Financial Institution.

The acronym gets mixed up a lot, but CDFI is what it is for short.

And CDFIs have a responsibility to market and to advertise and to get this information out.

For example, we have 1.8 million customers, 5% of all U.S. small businesses.

We've financed 650,000 of them.

But that delta is the education.

Right?

And it's really important that education gets out because... >> When you say that's delta, you mean that can make the difference, education?

>> That's what makes the difference 'cause some people come to us, they just want the education.

>> Education, education, education.

>> Right.

>> Well, the reason why I'm emphasizing this point with you, Everett -- there's another myth in some of our communities that you don't need an education.

>> Yes.

>> I know a group of young people, they want to stack their paper... >> That's right.

>> ...but have no idea of the -- how to navigate, even when they may have a little sum of money... >> That's right.

>> ...what to do with it.

>> Yeah.

>> How do you get the knowledge that you have to the broader community?

>> So, we have a nonprofit called The Center by Lendistry.

It actually was started in Baltimore in 1999.

It's actually older than Lendistry.

And then we brought it to California, and now it's national like we are.

>> And Lendistry is for profit or nonprofit?

>> For profit.

>> Okay.

That's good.

>> Yeah.

That's the lessons from that first bank.

>> Listen, I've been involved in the civil rights movement for over 60 years.

>> Yeah.

>> For-profits feed the non-profits.

>> Always.

>> As a nonprofit, you don't have a relationship with a for-profit, you're always gonna be struggling.

>> That's right.

And you can imagine my history.

I mean, it would almost be a disrespect to some of the people that taught me when I was 26 years old.

They fought so hard for us to get the access.

And it's not that the nonprofits don't have the access, but there's clearly not a lot of nonprofits that access the public markets, that access private securitizations.

>> They may not even know a nonprofit can access... >> That's right.

And I don't know that the laws are built -- >> Again, there's a lot of misinformation out there.

>> Correct.

>> And I would even say disinformation.

>> Correct.

>> Particularly in communities of color.

>> Yeah.

>> This whole question of trust.

>> Yeah.

>> You know, I know some people still keep their money under their pillow, in the mattress 'cause they don't trust the banking industry.

>> That's right.

>> How do we overcome these >> You know, I think my answer is going to be one that -- I've come to put my banking knowledge to the side and look at data.

And for us, it's technology and artificial intelligence.

And I'll break it down three ways.

We have, since my grandfather and beyond, hope that this perceived risk concept goes away.

The truth is, when two people sit down, something happens, good or bad.

There's a measurement that happens.

And for us, we've been hoping that we would be able to dress a certain way, look a certain way, have financials a certain way.

Reginald Lewis is an example of this.

But that perceived risk is not going away.

The computer -- As long as the artificial intelligence is in the right hands, with the right people, with the right data, there's no perceived risk.

>> So, let me say, if I understand you right, the advances in technology, particularly in artificial intelligence, you're saying, levels the playing field?

>> Absolutely.

>> That's an interesting concept.

>> And I'm gonna tell you two other things.

We've done studies about when someone applies and when they upload information to our portal.

The majority of people, the majority of business owners, are 7:00 p.m. to 2:00 a.m.

The majority.

And when you take that one simple data fact, we have two choices.

Either we reverse all the hours in banking, or we need to give people access.

The predatory lenders have figured this out and they figured it out really, really well.

The question is, when are the good guys gonna show up in a high-quality way?

When are we gonna do what we know the predatory lenders are doing?

'Cause we see the data.

The numbers don't lie.

Every program we've run for a city, county, or state, we used to shut them off at 12:00 a.m. Now we shut them off at 2 a.m. because literally the amount of people that are online from 12:00 a.m. to 2:00 a.m. And let's just make it simple.

A woman's running her business from 9:00 to 5:00.

She's taking care of the kids, family, whatever 5:00 to 9:00.

When does she have time to take an application?

When does she have time to learn this disinformation?

When does she have time to watch a YouTube or something?

Right?

And I mention YouTube because she doesn't have time to sit down with somebody one on one.

We would like her to sit down with somebody one on one.

But the truth is she doesn't do that.

You can only sit down with somebody one on one when your business gets to a certain size that someone can cover your business.

>> So, you mentioned YouTube.

Can you get accurate financial information on YouTube?

>> You can get it if it's done right.

So, we put some stuff on YouTube.

There's bad stuff out there, too.

>> You can find whatever you're looking for, but sometimes what you think you got... >> Right.

>> ...may not be valid.

>> That's right.

And so the third point I'll bring up is scale.

And right now we have the biggest opportunity right now.

If you look at foreign investment, foreign investment is trying to come to the U.S.

If you look up pent-up demand -- everybody knows about it -- it's here in the U.S. >> Explain pent-up demand.

I think I know what you mean.

>> Pent-up demand is when there's billions of dollars on the sidelines.

So, when you have something like what happened with the CARES Act and certain things that happened with Congress, trillions of dollars get released.

The government starts to pull it back, but it can't pull it all back at the same time.

So, sitting with someone -- And that someone today are banks, private equity, some of the people we already mentioned.

And they're hungry for return, right, 'cause they owe the money to somebody else.

It could be your 401(k).

It could be an annuity.

It could just be traditional investors.

They need investment returns.

And so their desire and insatiable need for investment returns means they need assets.

Well, loans are assets, right?

And so if we take a step back and we think about this, there's money on the sideline that needs us.

There's misinformation about or perceived risks of whether or not we can pay back.

So if we can issue loans where people will pay back, the money will flow in.

And then you have scale.

Artificial intelligence and technology give you the scale.

Rinse, wash, repeat, right?

They give you the ability to do things in billions and eventually in trillions.

That's what I'm interested in.

>> So, all the minority-owned business leaders that are watching this program, you're saying they have to pay attention to the data and utilize artificial intelligence in how they present the asset value that they have?

>> That's exactly right.

Or let us help them.

But yes.

>> And I saw a statistic, man.

You've deployed in Lendistry billions of dollars.

>> Correct.

>> How many billions?

>> 10.

Almost at 11.

>> Brother's sitting here deploying $10 billion?

>> Yes.

>> Man.

Do you have bodyguards?

>> [ Laughs ] I got one or two.

>> No, but what I'm saying is, first of all, congratulations on your success.

>> Yeah.

>> And you need to write a book, brother.

>> Yeah.

I got to figure out a way to get the information out.

But I want to be clear.

Even at $10 billion or $11 billion, we still got a long way to go.

>> Don't discount $10 billion.

>> I agree.

>> I think that your success -- I'm so glad that we have an opportunity to bring you on "The Chavis Chronicles."

There's so much bad news out there talking about people's failures, people's corruption.

I mean, there's always some angle.

>> That's right.

>> When somebody sins, all of a sudden they fall.

>> That's right.

>> And you're still ascending.

>> That's right.

And helping others, too, in the process.

>> In terms of the aspect of banking that you do, I think you've already answered, but I want to be more specific.

Is the pendulum swinging in the right direction?

You think there's more and more opportunity today?

Or is the pendulum narrowing, where people have less opportunity?

>> That's a hard question, to be honest.

I mean, I think -- I hope that Lendistry is making a big enough difference that it's swinging the right way.

I'm also realistic that it would take several, maybe even thousands of Lendistrys for it to fully hit... >> Really?

>> ...the pure opportunity that's out there, yeah.

I mean, you know, one of the big money center banks did a study, and they said we're about several trillion dollars behind.

>> Who is $7 trillion behind?

>> In terms of the lack of wealth or the opportunity to help minority communities.

Now, they're including small businesses and housing, student loans, and they're throwing everything in there.

But when we start to think about, you know, our piece of the world, which is really core today as small business -- We're starting to get into housing.

We're thinking about things like insurance.

As we start to think about knocking down these additional walls, I believe there's still a ways to go.

>> Right.

You know, I'm from North Carolina originally.

>> Yeah.

>> There's a very famous company called the the North Carolina Life Mutual.

>> I know them well.

>> Insurance company.

And in the 1950s, they built the first skyscraper in Durham, North Carolina.

>> Yeah.

>> But today, 2024, North Carolina Mutual does not issue any more insurance.

>> Yeah.

>> They were undercapitalized.

>> Yeah.

>> And after 2008, things just went down.

>> Yeah.

>> So, how do you rescue -- to rescue businesses that are in financial trouble?

>> I mean, I think the answer is you have to put in fresh capital.

We spend in our community 90% of the time talking about access to capital, 9% of the time talking about deployers of capital, 1% of the time about how it all works.

>> Now, you are a deployer of capital.

>> I'm a deployer.

>> That's very interesting.

>> I spend more time now on how it works than I spend on who it goes to.

The answer to your question is, if we had access to public markets.

There's a key word in that business that you said -- "mutual."

>> Yes.

>> Mutual was a structural way for us to have access, but not full access.

Access is the public market.

What that company should have done or what someone that rescues it does, they're gonna go to the public market.

I'm gonna to give you an example.

When rates started climbing last year and Powell stood up there -- Chairman Powell said, "I'm gonna raise rates" -- every company that was public started borrowing money.

Why?

'Cause they knew they could borrow at 2% and 3%.

>> Right.

>> And then what happened to the minority businesses?

They started borrowing when it was 500 points higher.

Well, 5% on $1 billion is a lot of money, right?

It's 50 million bucks.

>> Yeah.

>> $50 million in interest can take your company down.

>> One thing that caught my attention is you deploy capital.

You're a lender.

>> Yeah.

>> You're not a bank.

>> That's correct.

>> Can you explain to our audience, how do you do that if you're not a bank?

>> When you start to think about what we need, it actually fits into a couple of different things.

And I would define it as product, process, and policy.

And so that then turns Lendistry into thinking about how to deploy capital.

So, one of our verticals are banks.

We actually borrow from banks and then lend to the small businesses.

So we're the intermediary.

The banks underwrite us, and then we turn around and underwrite the customer.

When we talk about dealing with that perceived risk, we are the gatekeepers then of the perceived risk.

That small business doesn't then have to go to the bank and have to fight through that perceived risk.

Right?

And it doesn't mean everybody gets approved, but we believe more people get approved.

The second vertical is government.

Every president since Nixon has issued funds to help underserved, undercapitalized communities.

But there's a bit of a round peg/square hole going on in terms of the policy and the legislation and the execution of deployment.

So, we spent a significant amount of time with policymakers, city, county, and state level, and say this is a way to actually deploy the capital where it needs to go.

And then the third is private companies.

We target Fortune 500s, Fortune 1000s, and we say to them, "You have a small business owner inside of your procurement, somewhere in that upline.

If you were to leverage that small business, you're probably gonna get better margins.

Or it could fit in your corporate social responsibility.

If we provide access to capital to those small businesses, you're gonna see a benefit."

So, Lendistry is a lender.

No bank deposits.

We don't do anything with treasury management.

We just help that small business get access to capital.

>> Well, that's a great goal.

We're gonna have to do a series of shows with you.

>> Thank you.

>> You have such vital and timely information.

>> Yeah.

>> As you look at the whole landscape... >> Yeah.

>> ...what gives you your greatest hope today?

>> I think the greatest hope -- and we talked about this a little bit -- is technology.

I think it's the great equalizer.

I think we've been searching for that opportunity, that moment.

Now we have a responsibility to pay back.

We have a responsibility to borrow correctly.

But this perceived risk, once it's gone, you're gonna see billions of dollars, maybe trillions start to flow 'cause the money is there.

It's not a question that the money's there.

The question is, how do we play matchmaker with the money that's out there and the people that need it?

>> Everett Sands, thank you for joining "The Chavis Chronicles."

>> Thanks for the opportunity.

>> For more information about "The Chavis Chronicles" and our guests, visit our website at TheChavisChronicles.com.

Also, follow us on Facebook, X, LinkedIn, YouTube, Instagram, and TikTok.

Major funding for "The Chavis Chronicles" is provided by the following.

At Wells Fargo, diverse representation and perspectives, equity, and inclusion is critical to meeting the needs of our colleagues, customers, and communities.

We are focused on our commitment to diversity, equity, and inclusion, both inside our company and in the communities where we live and work.

Together, we want to make a tangible difference in people's lives and in our communities.

Wells Fargo -- the bank of doing.

American Petroleum Institute.

Through API's Energy Excellence Program, our members are committed to accelerating safety, environmental, and sustainability progress throughout the natural-gas and oil industry around the world.

Learn more at api.org/apienergyexcellence.

Reynolds American, dedicated to building a better tomorrow for our employees and communities.

Reynolds stands against racism and discrimination in all forms and is committed to building a more diverse and inclusive workplace.

At AARP, we are committed to ensuring your money, health, and happiness live as long as you do.

♪♪ ♪♪ ♪♪ ♪♪ ♪♪