Former Goldman Sachs Banker Runs Business Making Small-Business Loans

Asked about his rates, Mandis said more than 20 percent “would be high for us.” The Goins case was an exception because the borrowers run a seasonal business, he said.

After Stiles and Mandis were interviewed for this story, Stiles complained to Kalamata. The company told her she could pay back the loan more slowly, lowering her payments by about $1,000 a week, she said in a second call.

“Although we had no legal obligation to do so, we did this without imposing any penalty,” Mandis said. “We hold ourselves to the highest ethical standards and compliance with applicable lending laws.”

Forever Yogurt

Mandy Calara, who runs the Forever Yogurt frozen-yogurt chain in Chicago, said his Kalamata loan worked out. He borrowed to cover payroll and rent in November when harsh weather cut demand. Calara said he found Kalamata through another online platform called Biz2Credit and doesn’t remember the terms of his deal. He didn’t have time to apply for a bank loan, he said.

“It’s sort of the best of the bad loans,” Calara said. “It was still pretty aggressive as far as what our deal was.”

Mandis said he wants to make his company the first that small-business owners call when they need financing. So far, Kalamata is still a small business itself, with two employees in Bethesda, Maryland. It has provided $6 million, he said, to borrowers including a Georgia gas station, a Florida doctor and a donut shop in Illinois.

‘Eye-Popping’

Kalamata sued the owner of a New Jersey liquor store for defaulting after borrowing $100,000 in February. The eight-month loan, which shows a 17 percent rate in its contract, effectively costs 53 percent a year, according to Opportunity Fund’s Lucioni.

“When you put it in a percentage, it sounds big and eye- popping, but you need to have a relative sense of it all,” Mandis said. “Should we let that company just go bankrupt?”

Mandis said the rates are justified because the businesses are risky, post little collateral and can’t get the money elsewhere. Borrowers have an average of $3.4 million in annual revenue and 25 employees, he said.

What Kalamata does isn’t subprime lending because the term refers only to consumers, Mandis said, and its customers are businesses. The people who own the companies have credit scores on average well above subprime, he added. Sometimes the money he advances isn’t really a loan at all, he said, it’s financing.