According to a recent Securities and Exchange Commission Filing, the company has raised $3 million from a group of five backers.
Based in Durham, North Carolina, LoanWell bills itself as “an end-to-end platform for lenders,” offering intake, origination, underwriting, closing, servicing and reporting in a single place. The company says its system can be completely branded and customized, similar to Squarespace, and is designed with the origination and servicing needs of lenders in mind.
But LoanWell’s co-founder and CEO says the firm has a larger mission.
“Today, nearly half of black households are unbanked or underbanked, causing a huge gap in financial inclusion,” Bernard Worthy wrote in a blog post in March. “Closing this gap is imperative, as it would improve economic opportunity and outcomes, especially for communities of color.”
Read more: Rethinking The Flow Of SMB Capital Into Underserved Financial Deserts
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PYMNTS explored this issue earlier this year in a conversation with Robert Villarreal, executive vice president of CDC Small Business Finance and president of the Small Business Finance Fund (Bankers Small Business CDC of California).
He described why many strategies to address underfunded small businesses have fallen short, and while only a complete overhaul of capital markets can make things more equitable for minority business borrowers.
“You hear a lot about food deserts,” said Villarreal. “Not only are there food deserts, but there are financial deserts, meaning there isn’t a bank or financial institution in those communities. And if there is a ‘financial institution,’ it’s a payday lender. It’s not a responsible lender.”
Even the Small Business Administration, arguably the largest government agency charged with connecting small business owners to capital, isn’t always helpful, as it operates through the banks and financial institutions Villarreal mentioned.
Worthy said LoanWell had previously fundraised more than $1 million to increase access to funds for thousands of small businesses, securing more than $100 million in loans in 2020 alone. The company said it also helped businesses stay funded during the pandemic through North Carolina’s Rapid Recovery Loan Program.
