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Photo contributed by Pathway Lending / Quentin Lawrence

Quentin Lawrence, vice president of lending for Pathway Lending in Chattanooga, has worked in banking, nonprofit leadership and in ministry for decades in the community where he grew up. In his new role with Pathway, Lawrence helps small-business owners who might not qualify for more conventional funding to access loans and coaching to build their businesses.

"I always saw the common thread in these roles as trying to help support financial progress in communities that are considered disadvantaged," Lawrence says. "Being able to help people in some of the most critical areas of their lives, when you talk about money and finances, this really puts that front and center. It tied a nice ribbon around all those experiences."

This interview has been edited for length and clarity.

Q: Pathway is a community development financial institution, or CDFI. What does that mean when it comes to supporting business owners?

A: We are not a traditional lender from the standpoint of a bank. We're a mission-based lender. We have some particular groups and target markets we try to cater to and work with while not excluding anyone else. There are barriers to access to capital for ethnic minorities, particularly African Americans, and for women and veterans, as well. Pathway's approach is to make sure there are no missed opportunities — that's our motto.

Q: Who is a typical client?

A: The majority of the individuals are small business owners with 500 or fewer employees and revenues that are pretty modest. We have the capacity to work with not only small business owners but mid-level commercial organizations, as well. The breadth we can do is extensive, but our sweet spot has been working with small business owners whose revenue may not be strong enough for a traditional lender to get on board. Banks are regulated from a federal level, so they have to fit with their boundaries. Some business owners have problems with getting that funding because of issues with credit. When you're talking about credit score, that's the first thing they look at to see if they can go forward with you. For us, though we take it into consideration, it's not the determining factor.

Q: What other factors do you weigh?

A: One of the big factors is the background of that business owner — do they have industry experience, do they have experience managing the financials of a business? Maybe not that they owned a business, but maybe they served as a manager working with the profit and loss of that business. We look at revenue, we look at that cashflow. If they were to be approved, would they still have a sufficient amount to cover that obligation and still have some wiggle room for emergencies? The other thing for us, and I think this is the most critical, we really lean heavily on the five Cs. The first four are character, capital, collateral, conditions — personal and business conditions. The fifth is whether that individual is coachable. That speaks to one of the more significant differences between us and a traditional lender is, not only are we putting capital out there, but we offer the educational resources to manage that business and the funds entrusted to them. So will they take advice from us, not only from me the lender, but our technical advisory team? Will they take coaching from us to put their business in the best place possible to grow and scale? Early on, I listen to see where they are. Is there an openness and a curiosity to learn more? I don't care how long you've been in business, you will always learn something new. That keeps you humble and hungry to want to know more and do better. When you have an individual willing to take that journey with you, that really speaks well to that entrepreneur's character and adaptability and they'll probably be a good fit.

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Photo contributed by Pathway Lending / Quentin Lawrence

Q: What do the loans tend to fund?

A: It may be buying equipment — the landscaping company that needs new lawn and garden equipment. It could be a small manufacturer looking to purchase a facility. I've also talked to a few individuals looking at trying to purchase an existing business. It's a wide array of needs and requests out there. We really try to leave the door wide open to be flexible with anyone who comes to seek help from us. If you find yourself shutting the door on some people, you never know if you could be missing out on that company that's able to scale and make a big impact in the community.

Q: How do you work with all the other existing resources for small business owners, such as CO.LAB, Launch Chattanooga or the Tennessee Small Business Development Center?

A: Those partnerships are critical. A lot of those different organizations I've worked with in my previous life working in economic development here. The fact that we have that relationship is helpful because they know me and I know what they do. We're not coming here to compete or to do any and everything. I've referred individuals to some of these service providers. If they don't quite have 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 those partners to say, 'this individual is at this level, and before we move forward we want to make sure they're in the best position possible to make this work.' I've leaned heavily on some of those partners, and it's really been great.

Q: Can you share one example of a success story?

A: I have one business client, a young lady who has an embroidery business. After she had her children, she started making little custom items for them, and her friends saw them and said 'that's so pretty,' and she came up with Sew Pretty Designs. She found herself making custom items for baby showers, but she's also part of a sorority and she started making custom items for the sorority and was licensed to produce materials for them and they thought maybe she could do that for other sororities. She had some equipment, but she needed more to produce at the level she needed to grow the business. She had only been in business a year, and with a traditional lender you will need to be in business two years. She was really early on, and she had revenue but didn't quite fit where a traditional lender would be. We were able to finance the equipment she needed and provide her with access to business advisory services — an internal advisor working side-by-side with her for the life of her loan with us.

Q: What does it take to make all of this happen?

A: I certainly don't want to make it sound like I'm doing this by myself. My focus is on the lending piece and connecting these individuals with the funding they need. We also have a vice president of client development, Katie Hendrix, who came from CO.LAB and Kiva [loan program], and the combination of the both of us will speak well to the success of what will take place here. She helps a great deal with thinking through the steps to really build the support that those entrepreneurs and their businesses need to really thrive. Between the two of us, the right hand and left hand working together to bring opportunity to the forefront, we'll make sure there are no missed opportunities. We're also really 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 collaboration with Pinnacle, Regions, First Horizon. We're really grateful to those banking partners who may not be able to do it themselves, but these institutions have decided to invest in the work of Pathway.

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