Microsoft co-founder Paul Allen is tossing his financial support behind a new Texas-based lending institution called Ascentium Capital. The idea behind the new entity — capitalized with $75 million of equity and a $250 million warehouse facility — is to support small businesses with the capital they need to grow their businesses.
It is not a bank per se. In fact, Ascentium emerged from the brain of Texas banker Tom Depping, who in a related move announced the sale of the banking operations (including four branches) of 27-year-old Main Street Bank. As part of the deal, Ascentium Capital plans to acquire $150 million worth of loans and commercial leases from Main Street.
According to The Wall Street Journal, Depping simply got fed up with the regulatory issues associated with running a bank and made it especially difficult to lend money to the small businesses that needed capital. Ascentium will not operate under a banking charter, but it still plans to loan money to small business operators like delivery truck drivers, dentists and restaurant owners who need equipment financing and typically require an average loan of about $100,000, reports The Journal.
According to the firm’s Web site, it plans to offer equipment financing of $5,000 to $250,000 for small businesses.
Allen’s Vulcan Capital has made a diverse set of bets over the years, including investments in telecommunications, cable, sports franchises and more. But expansion into small business lending appears to be a new one.
“We see a tremendous opportunity to meet the lending needs of small businesses,” said Geoff McKay, a managing director of Vulcan Capital, in a press release. ”We believe Tom and his team are well positioned to capitalize on this opportunity given their outstanding long-term track record, their proven commitment to high standards of integrity and customer service, and the expertise to succeed.”
In addition to Vulcan, LKCM Capital Group participated in the funding of Ascentium Capital.
Interestingly, the news comes just as Seattle’s Lighter Capital — which also offers loans to small revenue-generating businesses — announced an investment competition for $500,000.