Why fintechs partner with community banks

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As fintech and banking infrastructure has evolved, more and more tech companies are entering the banking space. Companies like Wealthfront, Credit Karma, and Betterment have been disrupting the financial services industry since the mid 2000s, but now, even consumer companies like Apple and Uber offer credit or debit cards, with rumors more will soon follow suit.

Even though fintech companies allow their customers to borrow, lend, spend, save, and invest, they’re not banks. Meeting the capital, regulatory, and insurance requirements to start a bank is often too difficult for startups. So fintech companies partner with banks to reduce certain regulatory and compliance risks. But massive, traditional banks and innovative, fast-moving startups don’t usually see eye-to-eye.

Instead of partnering with banking behemoths, tech companies like Stripe,1 Affirm,2 Robinhood,3 and now Carta partner with community banks to meet growing demand for new financial products.

What is a community bank?

Traditional definitions of a community bank have focused on where and how the bank does business; for example, whether it’s limited to a geographic region or focuses on relationship lending. 

The FDIC looks at several criteria to decide whether a bank can opt into special regulatory frameworks for community banks. According to the FDIC, community banks have a leverage ratio of greater than 9% and less than $10B in consolidated assets, and meet some other criteria, including limited amounts of off-balance sheet exposure.4

When Carta decided to offer capital call loans, we considered a traditional bank, but we found that traditional banks were elitist, slow, and had trouble integrating with our technology. Instead, we decided to partner with Coastal Community Bank, Member FDIC.

Community banks are ideal tech partners for a few key reasons:

  • Flexible and responsive – Carta partnered with Coastal and launched our first lending product within a couple of months – it often takes this long just to set up an introductory meeting with a traditional bank
  • Tech and integration driven – most conventional banks have an ancient tech stack and manual processes that are difficult and time consuming for their customers and business partners to work with. Partnering with fintech is integral to the strategy of community banks like Coastal, so it’s much easier to partner and build products
  • No massive marketing budgets unlike larger banks, community banks aren’t spending to build national brands, which means they have more working capital than you might think

Coastal is adaptable, selective, and understands how to take a business from zero to one—plus three of their board members hail from fintech: attributes that made them the obvious choice to help us offer capital call loans to Carta customers.

Carta + Coastal

We’ve partnered with Coastal to bring you impeccable banking service coupled with Carta’s integrated technology.

Coastal is an SBA Preferred Lending Partner, so we worked diligently with them to build, test and optimize a simplified application for the Payroll Protection Program (PPP). Coastal has secured over 2,400 PPP loans for small businesses across the US, including Carta customers and small businesses applying through carta.com. 

We’ve also partnered with Coastal to offer capital call loans with low up-front fees and fast closings. With our capital call lines, you can expect:

  • Competitive rates. Everyone gets our best offer. Borrow at PRIME minus 0.75%, plus a $2,000 subscription fee per $1M of facility and a one-time $3,000 line closing fee.5
  • Low fees. Get started with a capital call line for as little as $5,000. No application fee, facility fee, unused line fee, or drawdown fee.6
  • One provider. Bundle your fund administration and capital call line providers to manage fewer vendors and make your back office more efficient.

Meet the Coastal team that makes it possible

Why fintechs partner with community banks 1

Laura Byers is passionate about meeting the unique banking needs of her community. She began her career as a teller and served as a branch manager, commercial lender, and district manager before becoming Chief Retail and Marketing Officer at Coastal.



Why fintechs partner with community banks 2

Tarah Herger brings 15 years of banking expertise to her role as Vice President and Division Manager. She began working with fintechs and investment companies when Coastal founded their Banking as a Service Division, CCBX. Tarah now leads the CCBX group. 



Why fintechs partner with community banks 3

John Dickson, Executive Vice President and Chief Operating Officer has been in the banking industry for over 35 years. He has dedicated his career to providing outstanding customer service at every level by prioritizing customer relationships.



Why fintechs partner with community banks 4

Jon Sand has been with Coastal Community Bank for more than eight years. In his role as Senior Vice President and Senior Credit Administrator, he utilizes his years of expertise in credit to lead Coastal’s team of Credit Analysts.




Greg Leigh Assistant Vice President, Senior Credit Analyst, has been underwriting commercial loans as part of the Coastal Community Bank family for nearly six years. Community is very important to Greg, and he serves on several non-profit boards.

Better together

Carta’s industry-leading technology backed by Coastal’s banking expertise allows us to bring you best-in-class loans faster and more affordably. 
See if you’re eligible for a capital call loan from Carta and Coastal.

 

5 Closing fee is per loan, fee is waived for renewals

6 If you miss a payment, late fees may still apply


DISCLOSURE: This communication is being sent on behalf of Carta Financial Technologies, LLC (“Carta Financial”), an affiliate of eShares, Inc. dba Carta, Inc. (“Carta”). This communication is not to be construed as legal, financial, accounting or tax advice and is for informational purposes only. Carta Financial offers capital call lines (“CCLs”) through a strategic partnership with Coastal Community Bank, Member FDIC (“Coastal”). If you are approved for a CCL, Coastal will be your lender. Carta Financial is not providing legal, financial, accounting or tax advice or any other professional advice or service. Neither Carta nor Carta Financial assumes any liability for reliance on the information provided herein. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security.

Coastal’s obligation to provide a CCL to you will be subject to customary conditions, including but not limited to satisfactory completion of due diligence on you, your general partner and your LPs and there being no material adverse change in your business/financial condition. Also, by submitting a CCL application, you authorize Carta Financial to review all information about you and your partners that you provide to or receive from any Carta Financial affiliate. 

All product names, logos, and brands are property of their respective owners in the U.S. and other countries, and are used for identification purposes only. Use of these names, logos, and brands does not imply affiliation or endorsement.


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