FINANTA: Breaking down barriers in accessing capital
Luis Mora remembers what it was like.
Originally from Costa Rica, Mora knows firsthand how challenging it can be for immigrants to adapt to the financial nuances of U.S. society.
“When I bought a home, for example, I was presented with all these loan documents by the bank,” Mora recalled. “I had no idea what I was signing because there was no technical assistance being provided by the bank or the mortgage company that was facilitating the transaction.”
“Thank God I was not exploited.”
Mora is President of FINANTA, a nonprofit lending institution that specializes in providing financial consulting services and access to capital for entrepreneurs, consumers, and first-time homebuyers in the Philadelphia area. The majority of the people that FINANTA serves are foreign-born, both in terms of lending (66 percent) and technical assistance (57 percent). About half of FINANTA’s clients prefer speaking in a language other than English (primarily Spanish) and 96 percent make low to moderate income.
A man who is quick to laugh, Mora is as welcoming as he is intelligent. He has been at the helm of FINANTA since it first launched about 22 years ago.
Speaking with AL DÍA from behind his desk at the organization’s office on N. 2nd Street, Mora explained that the idea for FINANTA was first conceived as part of a federal program called the Empowerment Zone, which assigned committees to address challenges facing neighborhoods in North Philadelphia, including access to affordable housing, education, healthcare, and economic development.
“One of the things that (the economic development committee) identified was the lack of capital and technical assistance for local entrepreneurs,” Mora said.
The group came up with the idea of creating an entity that would be able to “facilitate access to capital for somebody that was going to be creating a business or expanding a business” within a particular geographic region in the northern section of the city.
Mora was selected to lead the project. He faced the task of building the organization from the ground up.
“There was just this idea of facilitating access to capital and technical assistance but nothing else,” Mora said. “There was no organization. There was nothing that I could somehow begin to grasp and expand.”
It took about a year for Mora to get everything in place, including a board of directors and non-profit status, before FINANTA could begin providing the community with the services it needed. Since then, FINANTA has made about 1,800 loans, equating to more than $55 million in total capital closed. The nonprofit has also provided about 80,000 hours of technical assistance to more than 4,000 recipients.
According to Mora, FINANTA has made loans as large as $3.3 million, which went to Congreso de Latinos Unidos to help that organization build a new headquarters, and as small as $400, which went to a group of people training to become carpenters.
“They needed a toolbox that the unions were selling for the training of these potential carpenters,” Mora explained. “And that toolbox was $400.”
While the majority of FINANTA’s clients today are foreign-born, it was not always the case. In the beginning, Mora said, the majority of FINANTA’s clients were business owners who had moved to Philadelphia from Puerto Rico.
Then, Mora said, those Puerto Rican entrepreneurs began selling their businesses to people of Dominican descent, who were relocating to Philadelphia from New York due to the increasing cost of living in the latter city. After that, the nonprofit organization Southwest CDC began introducing FINANTA to African immigrants.
Today, Mora said about 60 percent of FINANTA’s clients are Latino immigrants, including Colombians, Cubans and, mostly still, Dominicans. He noted that Mexicans, who have more recently started migrating to the Philadelphia area, are beginning to work with FINANTA, as well as people from Lebanon in Western Asia.
While the majority of FINANTA’s clients today are immigrants, Mora said this aspect was not a specific goal that the organization set out to accomplish when the venture launched. Rather, the process happened naturally, with word of mouth attributing to the building of trust in immigrant communities, causing more and more people to walk through FINANTA’s doors.
“I feel pride in saying that FINANTA is an organization that will lower the barriers that the industry has established to keep people from having access to capital,” Mora said. “We give them the opportunity.”
Mora explained that FINANTA works with each client to determine her or his financial need, then serves the client based on that need, whether it’s expanding a business, buying a home, establishing credit, or something else.
While FINANTA provides the access to capital, the organization never does so without ensuring that the borrower understands all aspects of the process, including financial obligations and interest rates. FINANTA’s staff accomplishes this through group workshops and one-on-one counseling.
“Every person that comes to FINANTA, if they have access to capital, it’s supported by technical assistance,” Mora said. “Everybody gets both things together.”
The entire staff at FINANTA shares a commitment to this mission.
FINANTA’s Vice President of Technical Assistance Melissa Taina Santiago said her department oversees the guidance provided to every borrower for “anything that they might need,” from credit building to mortgage intervention to rental assistance. She believes one reason FINANTA is able to earn the trust of its clients is because of the staff’s diversity.
“We are very diverse here at FINANTA, and we understand culture… We speak their language. We come from different backgrounds,” Santiago said. “I think that makes us very unique.”
The job comes with its share of challenges, Santiago said. She noted that many of FINANTA’s clients have no traditional banking systems in their countries of origin so the U.S. financial system is completely new to them, but the work—helping “people climb that financial ladder and become self-sufficient”—is rewarding.
It’s a sentiment echoed by Jonathan Rollins, FINANTA’s Chief Operating Officer, who has worked in the “overarching field of financial inclusion” for ten years, including stints in various financial roles in Nicaragua, Bolivia and Peru.
“What I’ve done over the last decade is explore the different ways that we can make incremental changes to the system to level the playing field as much as we can,” Rollins said. “So that economic opportunity is really something that’s available to everybody in a way that everybody can access it and strive for whatever financial goals they define for themselves.”
Mora said one of the most important services that FINANTA offers is a program inspired by “lending circles," a financing concept he said is a familiar one in cultures in Latin America, the Caribbean, Africa and Asia, but less so in the U.S.
To explain the way the concept works, Mora used an example: a group of people will meet monthly, each bringing with them a certain amount of money (say four entrepreneurs with $2,000). First, one member of the group will borrow from the other three so that entrepreneur has $8,000. The process will repeat the following month with another member of the group, and so on. Once the rotation is over, every entrepreneur has had access to $8,000.
“There is an affinity and a moral obligation for these participants to do well with the group,” Mora explained. “Otherwise, they shun away basically and they begin to close doors.”
As the rotations continue, the amount of money each entrepreneur contributes and receives can increase incrementally. After a few years, rotations of $8,000 can become hundreds of thousands of dollars.
According to entrepreneur Ozzie Quintero, the program offered by FINANTA that is influenced by this process works.
Quintero, who was born in Colombia and came to Philadelphia in 1989, is general manager of Triumph Exterminating. His company operates two retail stores in Philadelphia selling pest control services and supplies. In 2012, a problem arose in which Quintero needed $8,000 for his company’s bills.
He had heard that FINANTA made loans, so he attended one of the organization’s seminars. He learned that FINANTA facilitated a program that could lend him about $1,000, a significant amount less than what he needed.
Thinking he had wasted his time, Quintero ended up getting a loan from “somebody on the street” — and wound up paying it back at a daunting 4 percent interest rate. He said this type of exploitive arrangement between borrower and lender is, unfortunately, common among immigrants.
About three years ago, the Greater Philadelphia Hispanic Chamber of Commerce reintroduced Quintero to FINANTA and he developed a better understanding of what the organization does.
“You have to go step-by-step,” Quintero said. “The way it’s supposed to be.”
He realized a business owner needs to borrow within his means, that taking loans too large can be risky. He praised FINANTA’s staff not only for their ability to communicate this to him, but to walk him through every step of the process, to show him exactly what he needed to do to improve his financial situation.
A bank, Quintero said, will simply approve or deny your application.
“Sometimes you get used to being denied,” Quintero said, adding that people often need high credit scores to gain access to lines of working capital from banks. “With FINANTA, it’s different.”
Quintero started out with a loan of $3,600 with FINANTA. Now, he said that number has increased to nearly $250,000.
FINANTA, Mora said, provides entrepreneurs and consumers with the tools to serve themselves.
“I think the most important part of what we do is that we have open doors,” Mora said. “If you’re looking for an opportunity, we give you that opportunity. It’s up to you to build it up, but you will get the capital and the support you need from us to do that.”