Mastercard: How open banking is providing small businesses capital to thrive

One day at a time. That was Sam Magtanong’s mantra when COVID-19 hit, threatening not only the long-dreamed-of expansion of the San Diego microroastery he built with his wife and two friends, but of the business itself.

“My vision was, if I could stay open for the next day, and if I can pay my staff one more day, and if I can serve one more cup of coffee, there’s a blessing there,” he says. “We just looked at it that way, and we kept just trying to stay open another day.”

For many entrepreneurs, accessing the capital they need to build their businesses can be challenging even in flush times. When Sam and Beverly Magtanong and their partners Jelynn Malone and Mike Arquines opened their first Mostra Coffee location in 2018, they struggled with cash flow and turned to Lendio and Finicity for a loan.

To help small businesses get the credit they need to grow and thrive, Lendio harnesses Finicity’s open banking platform, which lets people more easily share their banking data with other banks, lenders and fintech companies. It gives lenders a more holistic view of a person or business’s finances to help them determine their creditworthiness.

“Eliminating financial hurdles and introducing small business owners to capital opportunities they may not know exist can extend the spirit of entrepreneurship to more people,” says Denada Ramnishta, senior vice president of Lender & Partner Strategy at Lendio.

The pandemic hit when Mostra Coffee was getting ready to open a second coffee shop. Lendio helped Mostra Coffee obtain a U.S. Paycheck Protection loan to keep the business running, hire back staff they had laid off at the start of the pandemic, and finish work on their second location. “I went from feeling a sense of desperation to feeling a sense of relief,” Magtanong says.

With the newest round of PPP loans, Lendio has started working with Finicity’s open banking platform to authenticate bank statements to reduce the risk of fraud in the process. Lendio and Finicity will be bringing their joint capabilities to small businesses in the U.K. and other markets in the coming months through a new strategic agreement. To read more about Mostra Coffee and the open banking effect, go to the Mastercard Newsroom.