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Profiles: meet small business leaders

Friday, February 27, 2009

Small Business Snapshot

Cash code - Lending Cycle focuses on banking, but its
culture is more like a software startup

Business First of Louisville - by Terry
Boyd Staff Writer

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Ron Bath|Business First

John Jackson, president and CEO of Lending Cycle, is
shown with his banking-specific software open on the computer
screens.
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Lending
Cycle Inc. has a product — browser-based work-flow software
that lenders use to track deals — aimed at the rather staid banking
industry.

And its founder, John Jackson, once worked as a banker at First Bank of
Kentucky Corp. in Louisville.

But Jackson, Lending Cycle’s president and CEO, calls his creation
“more of a research company than anything else.”

It is, he said, an 18-month-old company with a go-for-it, high-tech
culture, focused far more on the next technological advance than on the
next acquisition.

Lending Cycle’s story is right out of circa-1996 Silicon Valley startup
lore.

Jackson, frustrated with paper spreadsheets and unconnected data
streams, dropped out of banking three years ago and started teaching
himself to program.

His goal was to create software that allows lending officers and bank
executives to track all loans — commercial, real estate and consumer — in
all stages of the approval process, along with the performance of the
people making them.

And he did. For Jackson, 2007 was the beta year when he worked out the
glitches in the LendingCycle brand software. But he didn’t have a company,
only his software.

Controlling overhead

At that point, the challenge was to get senior executives on board
without paying six-digit annual salaries, Jackson said.

So, he went looking for people willing to take a chance, “and I talked
them into being investors.”

Now he has 19 people who work as volunteers, or for deferred pay, at
the company’s headquarters off Blankenbaker Parkway.

Three of the 20, including former First Tennessee Bank executive Bruce
Schratz, invested between $25,000 and $100,000 in Lending Cycle and have
an equity stake, Jackson said. Plans call for Schratz to lead the
company’s sales staff later this year, he said.

Some will have a transition to the company as Lending Cycle builds its
client base, Jackson said. Finally, some “employees” just volunteer
because they’re interested in working with a new technology.

Jackson launched Lending Cycle in January 2008. After one year, it has
13 bank clients, including 11 signed in the third quarter. All are small
banks with assets of less than $1 billion.

They include Financial Federal Savings Bank, based in Memphis, and
Landmark Community Bank, based in Colliersville, Tenn. Lending Cycle is in
what Jackson termed “advanced negotiations” with one large regional bank
he declined to identify and in early negotiations with three other
banks.

Customized data

LendingCycle subscribers pay $799 to $1,499 per month for unlimited use
of the software, which operates through “computer clouds,” or clusters of
remote servers, and is not installed on clients’ systems.

Jackson declined to disclose the company’s first-year revenue but said
that it “dramatically exceeded” projections.

There are larger competitors, such as Baker Hill, part of Dublin,
Ireland-based Experian Group Ltd., and less expensive companies, such as
Quest Credit Group, based in Fort Worth, Texas.

But Jackson claims Lending Cycle has several advantages.

Some bank software costs as much as $100,000 and is rigid in that it
makes users conform to methods that call for a certain number of
processing stages or employee categorization, he said.

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