Banking On The Work Ethic

Speed Bumps

There were ups and downs along the way, of course. About two years in, Progreso’s team developed a relationship with Sears and K-Mart. The team was delighted when they won the opportunity to establish lending kiosks within those larger retail environments. “We thought we could sign one contract with Sears and they would roll us out into some 500 stores across the country,” says Gutierrez. “It seemed like a chance for us to scale up very fast and become a huge company overnight.” Well, that’s what it looked like going in. Sears and K-Mart eventually discontinued the in-store kiosks. Disappointing loan volumes highlighted some of the limitations of Progreso’s community-focused, micro-financing lending model. That would-be dream opportunity proved to be a fruitful, if painful, learning experience. “We quickly realized we had to stay focused on our community, grassroots approach, at least for a while until we’re big enough to try again,” says Gutierrez. Another headwind: the financial implosion of 2008. When the economic crunch arrived, Progreso found itself in a precarious position. Making the case to invest in a micro-lending firm that issues loans to individuals lacking credit histories is a tough sell even in a healthy environment. Weathering the economic storm by securing continued investment capital became Gutierrez’s primary concern. “We’d been growing. Now we were running out of cash. And if you do that, it’s game over,” says the CEO. “It was practically impossible to get money; we almost didn’t make it.” Progreso enjoyed two advantages, however. As a lending firm instead of a traditional bank, it avoids some of the regulations that prevent mainstream financial institutions from making loans deemed too risky. Moreover, as small as it was, the firm had developed a track record of low losses and high repayments. “We were able to find a couple of new investors, including a family from Mexico who had seen micro-lending work in their country,” says Gutierrez. “Our new investors injected enough capital to put us back on the track for success.”

Business Success and Looking Ahead

Indeed, as of 2011, the Progeso Financiero story appears to be one of success. In the last five years, Progreso has grown to include over 60 micro-lending locations across California and Texas. It has nearly 200 employees who have helped process more than 40,000 loans, totaling over $40 million. “Looking ahead, we have ambitious goals we’d like to meet,” says Gutierrez. Even better, he thinks he and his team are in a position to meet, and possibly surpass, them. Gutierrez, who was a featured speaker at the Clinton Global Initiative two years ago, has been recognized for his work in pioneering new policies in banking reform, and the financial empowerment of America’s impoverished. In 2009, he was invited to the White House as a leading young entrepreneur, and received the Entrepreneur of the Year Award from Hispanic-Net, an organization where Hispanic entrepreneurs, executives, innovators and investors come together to create leading companies.