Pathway Lending helps Las Paletas, others succeed

In 2001 Norma and Irma Paz opened Las Paletas in the 12South neighborhood and began selling Mexican Popsicles made with fresh fruit — a simple, yet novel product for Nashville residents. Their business become a neighborhood icon drawing crowds of young families, students and curious tourists.

"It really was the community that started walking into our doors and experiencing our product and loving it and bringing friends and family and out-of-towners," said Norma Paz, who has never formally advertised her business.

When Las Paletas began selling 1,000 paletas in a day, the Paz sisters realized they would need more room. They were renting a 600-square-foot space and wanted to buy a larger building down the street, but needed more capital. Local banks directed them to Pathway Lending, which offered Paz a 20-year loan, with 100 percent financing. In 2010 they bought the building, perfectly located across from Sevier Park, and on weekends throughout most of the year, a line forms outside the door.

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Pathway has been supporting entrepreneurs in Tennessee for more than a decade through its lending program that focuses on underserved business owners — women, minorities and those in low-income areas. The organization, based in Nashville, provides capital to companies that typically struggle to obtain loans in their early stages. Many banks require that a company has been growing revenues or has been profitable for two years before opening their coffers and, even then, businesses can fail to qualify.

"We try to fill that gap," said Amy Bunton, president of Pathway's Women's Business Center. "Once we get them in a sustainable model, a lot of our clients graduate and go on to get loans with the community banks that have invested with us."

Community and regional banks are still a critical part of Pathway loans, as Pathway borrows from local bank partners to lend to Pathway companies. By supporting businesses with additional resources and holding them accountable to growth targets, Pathway can help ensure their success. The organization boasted a default rate that was less than 1 percent in 2014, Bunton said.

The group has worked with 420 businesses, making 750 loans for nearly $115 million. Their loans range from $5,000 to $2 million, and their local roster has included homemade pie maker Mama Turney's Homemade Pies, The Green Truck Moving Company and The Johnny Cash Museum.

Nashville entrepreneur Christi Baeuerle struck out at two local banks before obtaining a $87,000 loan from Pathway that would allow her to grow a second business, a healthy vending company called YOUR Healthy Vending. The capital allowed her to pay for the vending machine equipment, and she has since placed 13 machines filled with healthy snacks in local hospitals and businesses.

"You have to hustle, hustle, hustle to find a bank that's willing to take a risk," Baeuerle said. "(Pathway) saw that our other business was profitable, we had managed it well. They said, 'let's do this.' "