#CheListenUp is a campaign encouraging people to listen to, learn from and spread awareness about the injustices that exist in our society. We are inspiring people to #GetUncomfortable by asking entrepreneurs, business owners, executives and leaders that we trust to share their view on what each of us can do to make things better. We interviewed Seke Ballard, Founder and CEO of Good Tree Capital, to discuss change, creative destruction, and the importance of voting!
—Julia Lytle, Founder Che Consulting
What is the origin story behind Good Tree Capital?
When I was a kid, my Dad owned a pulpwood logging company, and from what I remember, it was your quintessential American business. He had maybe 15 to 20 full-time employees and was looking to expand his business to surrounding states, but he had old equipment. So he applied for a number of small business loans so that he could modernize his equipment, but he was rejected by every single bank for every single loan. His hypothesis was that it didn't have anything to do with the merit of his business, but instead the color of his skin. And as it turns out, he was exactly right.
How exactly did this moment catalyze Good Tree Capital’s mission?
If I walk into a bank and a white guy walks into a bank and we both have the exact same profile—we are the same education background, the same wealth background, and income background—then I am 2.7 times more likely to be rejected for a small business loan. If I get the loan, then I'm going to pay 1.8% more in interest. And this is generally true across all forms of debt financing. One of the more stunning findings was that it's not just true for people of color, but it's also true for women.
The root cause of the issue is that there is a lending officer who's bringing to that encounter all of their conscious and subconscious biases. This leads them to make flawed lending decisions that are not in the interest of the bank, not in the interest of the prospective borrower, and quite frankly, leads to pretty challenging outcomes at a macro level.
What do you think people need to hear today re: changing systems like our antiquated/biased small business loan approval process?
I have this sense that we’ve all forgotten that someone has to do the work. If not you, then who? If not now, then when?
I’m sitting in my office looking out the window at a streetlamp right now, and all I can think is - somebody had to put that streetlamp there. Somebody has to change the lightbulb when it goes out. All of which is to say that, as a society, we should appreciate that if something is broken, WE have to fix it.
What does this look like on an actionable level for individuals looking to make a difference?
First and foremost, it means get registered and vote. It sounds obvious, but I see so many people that don’t engage in that simple, simple way. The most potent power we have in this country is the power to vote, and it’s probably the most taken-for-granted power we have. Beyond that, it means engaging with the vote and using your voice to reach out to representatives and share your ideas. All of these messy problems that we’re pointing out require that we actively fix them, and actively engaging doesn’t mean writing something on Twitter. It means using your energy to write to your representative.
And finally, what solution are you building? Good Tree Capital observed bias in lending, engineered a solution and works every day to refine and scale our solution. We’re just one company. Whether it’s healthcare, education, criminal justice—what alternative is the reader creating that might, eventually, supplant what currently exists?
What things have you done as both an individual and business leader to engage with members of our government? Have you seen tangible impacts come from your efforts?
I’ve engaged my 1st amendment right to petition my government at every level—City, State and Federal—particularly with respect to cannabis and banking legislation. On all fronts, I’ve been met with legislators and policymakers who are open to the best ideas no matter where they come from.
Illinois lawmakers were extremely receptive to ideas to lower the cost of entry for social equity applicants as well as ideas to increase state support for those same applicants.
Similarly, we reached out to our federal legislators in the House and Senate to articulate our views on how they can support expanding fair access to capital, particularly vis-a-vis pending banking legislation.
I believe that they too see the current moment as an opportunity to go so much further than tinkering around the margins. We have a real opportunity to create new systems.
Where do we begin creating these new systems?
I begin by a 3 step process. Ask questions, do research, get creative, then repeat. After I had the conversation with my father where he told me about being rejected for 13 consecutive small business loans, I did my research and confirmed this massive inefficiency in banks’ loan origination standards. Then I decided to invest energy in creating a better system. I created a system to evaluate small business loans without involving the personal bias of a loan officer.
My dream is that one day a critical mass of the nation’s lenders will adopt more objective, data-based lending practices that lead to a more equitable distribution of debt capital.
When you look at Good Tree Capital and the work you’ve done, how is this an example of the creative solutions you’re referring to?
Not only do we see the potential in our solutions, but we hope that we inspire others to build, innovate and creatively destruct other obsolete or inequitable systems in our country, and in our world.