Combining old school, relationship-banking ethos with new-style technology, a startup seeks a foothold in potential lucrative market: connecting small businesses with lenders.
More than 50 years on, Jerry Campbell, 78, isn’t yet ready to cash in on his lengthy and lucrative banking career.
The Michigan-turned-Florida community bank executive’s latest venture: a matchmaking entity of sorts to connect small businesses nationwide with community banks for loan opportunities, using proprietary data algorithms. The company, Tampa-based CapTec USA, charges community banks a fee for the service.
“There is a surge in fintech, but we don’t see anyone doing anything like what we are doing,” says Campbell. “We are filling a big void. We think this is a huge market and giant opportunity.”
'We know a lot about small business lending. We are community bankers and we understand their side of the ledger.' Jerry Campbell, CapTec USA
Campbell, who orchestrated the sale of his most recent bank, Tampa-based HomeBancorp, to First-Citizens Bank & Trust Co. in 2018 for $113.6 million, says the crux of the opportunity is on volume: both in the national network of small businesses (some 30 million) and community banks (about 6,500). The firm will also target national lenders, not just community banks, for business.
Joined at CapTec by former HomeBancorp executives Dana Cluckey and Tom Welsh, Campbell projects the venture’s decades of experience navigating the small business loan industry will be a big advantage.
Cluckey was president and COO of HomeBancorp, and was also president and CEO of Ann Arbor, Mich.-based Republic Bancorp, a $6.2 billion-dollar bank Campbell co-founded, helped grow, and later, sell, prior to HomeBancorp. Citizens Banking Corp., then based in Flint, Mich. acquired Republic for $1.1 billion in 2006. Welsh, meanwhile, was a senior vice president and chief accounting officer at HomeBancorp subsidiary Homebanc.
Beyond Campbell and his team, both Republic, founded in 1986, and Homebanc, launched in 2007, share a common business trait: small business loans. That comes from decades of working with the SBA, USDA and myriad other lending agencies and entities. Republic was a top SBA lender in Michigan for a decade, while Homebanc made the SBA’s top 10 for loan volume in Florida from 2012 to 2017 under Campbell and Cluckey.
“We know a lot about small business lending,” Campbell says. “We are community bankers and we understand their side of the ledger.”
They get the industry so well, their experience is a key selling point to potential CapTec investors on the company’s projected ability to capture market share. “Many borrowers do not realize there are community banks willing to lend to them on better terms,” CapTec says, in part, in a prospectus sent to potential investors, “and many community banks lack the sophisticated tools necessary to identify the best small business loan applicants.”
In addition to connecting those dots, the CapTec team says one advantage they have, from decades of experience, is working on complex loans, particularly if there’s real estate involved. “By combining relationships, technology and experience,” the prospectus states, “CapTec provides small business applicants with better loans and helps community banks thrive.”
So far, the company has raised about $4 million, mostly from a small group of investors. And business development, including marketing CapTec’s concept in a crowded fintech field, has been going well, says Welsh, executive vice president and CFO of the firm. Welsh signed up one lender in early April, and was close to closing a second client the following week. The firm has other clients, too. “We have big ambitions on where we can take this nationally,” Welsh says.
CapTec’s model requires selling its vision to both potential borrowers and lenders. On one side, the banks it works with provide the geographies, industries and borrower characteristics required to offer the best lending terms, according to the investor prospectus. “CapTec then utilizes its proprietary data mining process to identify and engage borrowers who meet those criteria and are eligible for better commercial loan terms,” the document states.
If a small business contacts CapTec directly, it will work with that company to identify lenders willing to lend to the applicant on the best terms. CapTec doesn’t charge fees to the companies that seek lenders.
Campbell, who grew up in a farm in west Michigan and was a bank president, for a small institution in his home state before he was 30, is invigorated by his latest gig. He never took up golf, he says, though he does play some tennis. And he doesn’t want to retire. “I plan to keep doing this as long as I feel good and healthy,” says Campbell. “This feels natural.”
(This story was updated to reflect that CapTec has multiple clients and the name of the company is CapTec USA.)