Quentin Lawrence, vice president of loans for Pathway Lending in Chattanooga, has worked in banking, nonprofit leadership, and ministry for decades in the community where he grew up. In his new role at Pathway, Lawrence helps small business owners who may not qualify for more conventional financing access loans and coaching to grow their business.
“I have always seen that the common thread of these roles was to help support financial progress in communities considered disadvantaged,” said Lawrence. “Being able to help people in some of the most critical areas of their lives, when you talk about money and finances, really brings that to the fore. It tied a nice ribbon around all of those experiences.”
This interview has been edited for length and clarity.
Q: Pathway is a community development financial institution, or CDFI. What does this mean when it comes to supporting business owners?
A: We are not a traditional lender from a bank’s point of view. We are a mission driven lender. We have particular groups and target markets that we try to respond to and work with without excluding anyone else. There are barriers to accessing capital for ethnic minorities, especially African Americans, as well as for women and veterans. Pathway’s approach is to make sure there are no missed opportunities – that’s our motto.
Q: Who is a typical customer?
A: The majority of individuals are small business owners with 500 or fewer employees and relatively modest incomes. We have the ability to work not only with small business owners, but also with mid-level business organizations. The scope that we can do is vast, but our sweet spot has been to work with small business owners whose incomes may not be strong enough for a traditional lender to engage. Banks are federally regulated, so they have to adapt to their limits. Some business owners find it difficult to obtain this financing due to credit issues. When you talk about credit score this is the first thing they look to see if they can move forward with you. For us, although we take this into account, it is not the determining factor.
Q: What other factors do you weigh?
A: One of the main factors is the experience of this business owner: does he have experience in the industry, does he have experience in managing the finances of a business? Maybe not that they owned a business, but maybe they served as a manager working with the profits and losses of that business. We look at income, we look at those cash flows. If they were to be approved, would they still have enough money to cover this obligation and would they still have leeway in an emergency? The other thing for us, and I think this is the most critical, we really rely heavily on the five Cs. The first four are character, capital, guarantees, terms – personal and business terms. The fifth is whether this person is coachable. This speaks to one of the most important differences between us and a traditional lender: not only do we invest capital, but we also provide the educational resources to run this business and the funds entrusted to it. So, will they take advice from us, not just me, the lender, but our team of technical advisers? Will they follow us to put their business in the best possible place to grow and evolve? At first, I listen to see where they are. Is there an openness and curiosity to find out more? I don’t care how long you’ve been in business, you will always learn something new. It keeps you humble and hungry for wanting to know more and doing better. When you have someone ready to take this journey with you, it says a lot about the character and adaptability of this entrepreneur and he will likely fit.
Q: What do loans tend to finance?
A: It may be buying equipment – the landscaping company that needs new lawn and garden equipment. It could be a small manufacturer looking to buy a facility. I have also spoken to a few people who are considering buying an existing business. It’s a wide range of needs and demands. We really try to leave the door wide open to be flexible with anyone who comes to us for help. If you find yourself closing the door on certain people, you never know if you might be missing out on this business capable of growing and making a big impact in the community.
Q: How do you work with all of the other resources out there for small business owners, such as CO.LAB, Launch Chattanooga, or the Tennessee Small Business Development Center?
A: These partnerships are essential. A lot of these different organizations that I worked with in my previous life were working in economic development here. The fact that we have this relationship is helpful because they know me and I know what they are doing. We don’t come here to compete or to do everything. I have referred people to some of these service providers. If they don’t have quite everything they need in terms of financial data or direction for their business, our thing is not to say “no, we can’t help you”, but ” let’s take a step back and see what you need to make this make sense. We have no problem reaching out to these partners to say, “This person is at that level, and before we move forward, we want to make sure that they are in the best possible position so that it works “. I’ve relied on some of those partners a lot, and it’s been really great.
Q: Can you share a success story?
A: I have a business client, a young woman who has an embroidery business. After she had her kids, she started making little personalized items for them, and her friends saw them and said “it’s so pretty”, and she came up with Sew Pretty Designs. She found herself making personalized baby shower items but she is also part of a sorority and she started making personalized items for the sorority and was allowed to produce material for them and they thought that ‘maybe she could do it for other sororities. She had some equipment, but she needed more to produce to the level she needed to grow the business. It had only been in business for a year, and with a traditional lender, you will need to be in business for two years. She was very precocious, and she had income but was not quite what a traditional lender would be. We were able to finance the equipment she needed and give her access to business advisory services – an in-house advisor working alongside her for the duration of her loan with us.
Q: What does it take to make all of this happen?
A: I certainly don’t want to sound like I’m doing it myself. My focus is on lending and connecting these people with the financing they need. We also have a VP of Customer Development, Katie Hendrix, who came from CO.LAB and Kiva. [loan program], and the combination of the two of us will speak well of the success of what happens here. It helps a lot to think through the steps to really build the support these entrepreneurs and their businesses need to truly thrive. Between the two of us, with the right hand and the left hand working together to bring the opportunity to the fore, we will ensure that there are no missed opportunities. We are also very grateful to our banking partners. The Chattanooga Small Business Opportunity Fund for the Chattanooga and Hamilton County area is a $ 7.5 million loan fund in conjunction with Pinnacle, Regions, First Horizon. We are very grateful to the banking partners who may not be able to do it themselves, but these institutions have decided to invest in the work of Pathway.