Studying accounting at La Salle University, Latisha Redmond knew she wanted to go into business: “You don’t have to take a state job or do the cookie-cutter deal. You can create whatever you want.” In 2012 she started buying Philadelphia rowhouses (at what now look like bargain prices).

Jesse Fells was a star basketball guard at Kensington High School and Fayetteville State in North Carolina. Back home coaching minor-league ball, he bought a new home in South Philly, but “the roof leaked; every bathroom leaked.” He learned to make repairs himself. “That made me want to get into the business. I figured, if that guy could build a house, I could build a better one.”

Redmond and Fells are among the Philadelphians who got in at the start of a national real estate boom that began after the late-2000s recession as small-scale developers. Rising interest rates have weeded out many of the part-time home-flippers working with their own cash, but these two say they plan to stay in the business, having learned how to raise money from lenders. Both are financed by Spring Garden Capital, a six-year-old institution that has made a new loan every day over the last year, averaging around $300,000 each, to small Philadelphia developers.

Half of Spring Garden’s borrowers, like Redmond and Fells, are people of color or women. Nationwide, around 1,000 of the 112,000 real estate development companies are Black- or Latino-owned, according to a widely quoted estimate by Grove Impact, a Washington bank consultant.

Spring Garden is an unusual institution, staffed largely with former bank lenders but funded by private investors, who aren’t required to have a banking license or follow the bank safety rules (such as independent appraisals) that developers say can slow deals to a crawl. Small banks have blamed regulation for forcing them to merge with larger banks, which don’t find small loans profitable.

The company has paid “double-digit returns” to its investors, said Jay Goldstein, a Philadelphia banker who cofounded Spring Garden six years ago. It typically charges 2% above the prime lending rate — which lately translates to around 10.25%, about a percentage point more than banks — plus 2% at closing, about double what banks charge.

Pro tip

On a recent Friday, developer Fells took delivery of a load of lumber for the first phase of home construction on a vacant Fishtown lot where he’d secured permits and dug the foundation.

He said he’s done seven projects with Spring Garden since the company formed.

It was a big decision in 2015 to borrow, he said. Bank of America and TD Bank branch officers “said they didn’t do investment money on that small a scale.” Dallas Comegys, a Philadelphia native, ex-NBA player, and fellow coach and investor, told him Valley Green Bank, just before its merger, was the city’s leading funder of small developers.

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