Former Goldman Sachs Banker Runs Business Making Small-Business Loans

Olive Branch

The way Mandis describes it, while some of his business- lending competitors may take advantage of borrowers in distress, he’s driven by something loftier than profit.

“There’s this obligation to try to do something to solve a problem in America in my own way,” he said. “Providing capital to people to grow their businesses and to give jobs to people is I think a good thing.”

Mandis said he’s funding Kalamata entirely with his own money and that he chose the name because of his family’s Greek heritage to evoke an olive branch extended to customers.

Sheila Stiles was one of his first. Her family has collected used motor oil from auto shops in Tennessee and turned it into fuel for more than 60 years. She said they try to run Goins Waste Oil Co. by Christian principles. With business dropping, they took a Kalamata loan in November because they didn’t want layoffs before Christmas.

‘Like Family’

“Everybody here is family except for two people, and they’re like family because we’ve known them all our lives,” said Stiles, the Chattanooga-based company’s treasurer. “The way they present it, it’s so tempting, especially when you know you’re in such a bind.”

Stiles said she sought out Lendio, an online platform that matches borrowers and lenders, which referred her to Kalamata. Goins borrowed $122,000, agreeing to pay back $165,920 in about 11 months, according to a copy of the contract. While Stiles was aware of the loan terms, she said they turned out to be more onerous than she thought. Goins furloughed employees so it could afford the sums that Kalamata took daily and then weekly from the company’s bank account, she added.

“I don’t think it’s fair,” Stiles said. “He’s taking advantage of the small-business owners because of the interest rate that he charges.”

‘Pretty Aggressive’

The Goins contract shows a rate of 36 percent. When calculated as an effective annual percentage rate -- like the ones credit-card or mortgage loans are legally required to disclose -- it would jump to 72 percent, said Marco Lucioni, a vice president at nonprofit lender Opportunity Fund. The U.S. Truth in Lending Act requires that rate be stated on loans to consumers, not businesses.

“Every time you make a payment you’re reducing the amount of money you had available to work with,” said Lucioni, whose nonprofit group helps entrepreneurs find affordable loans. “When I’m telling you a dollar amount you have to pay on a daily basis, that’s always going to sound so little and affordable. Don’t fall for these gimmicks.”