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Former La Luz director launches Latino-focused microloan nonprofit

As Juan Hernandez puts it, he may not come from wealth but he does come from success.

Much of that success is due to the diligence and versatility of his paternal grandmother, who worked odd jobs in the community — from lay midwife to seamstress to cook, Hernandez said, adding that each job enabled her to earn enough money to support eight kids in Houston’s Fifth Ward.

Her efforts made it possible for his father, who became a pastor, to have a brighter future than hers, he added.

“It was her entrepreneurial spirit,” Hernandez said of his paternal grandmother. “She didn’t have a job, she didn’t speak good English, but she knew how to do business.”

After nine years at the helm of La Luz, a Sonona Valley-based Latino advocacy nonprofit organization, Hernandez, 46, is taking a page from his grandmother’s book with the launch of his own business venture.

The idea? An expansion of the microloan program he started at La Luz in 2016, which gave small, low interest loans to local business owners who may not otherwise qualify for the infusion of cash offered by traditional lending institutions, such as banks or credit unions.

Called Creser Capital, Hernandez’s nonprofit is pending approval from an agency under the auspices of the U.S. Department of the Treasury to become a Community Development Financial Institution. These organizations are especially certified in order to provide financial services to low-income and underserved communities.

This type of financial institution receives funding from private investments, other nonprofits, or banks that are encouraged to give back to their communities through the Community Reinvestment Act, and through federal programs.

Hernandez hopes that by bringing microlending to a broader swath of Sonoma County, he can help more small, Latino-owned businesses achieve economic success in a manner that is culturally-sensitive and responsive to their specific needs, he said.

“As Latinos, we have to be architects of our own solutions,” Hernandez said. “That really drives me and it comes from the idea that you can’t have social justice without economic justice.”

When a donor approached Hernandez in 2015 about contributing $50,000 to a project of Hernandez’s choosing, he knew he wanted to use the money to start a microlending program at La Luz, he said.

He saw the gentrification that was happening in Sonoma Valley’s Springs neighborhood, where existing families, predominantly Latino, were being priced out of the area by wealthier transplants from elsewhere in the Bay Area.

He also saw how locally owned Latino businesses, like small family-owned grocery stores, didn’t have the access to small loans to complete projects that would better root them in the community, Hernandez said.

After receiving the donation, one of La Luz’s first loans was to a woman who made traditional Ballet Folklorico dresses and whose sewing machine broke ahead of a big show, Hernandez said.

Without enough savings to buy a replacement, the woman turned to La Luz, which approved a $1,000 loan so the woman could purchase a new sewing machine.

“The show was a success,” Hernandez said. “She paid it off $50 a month … and she was consistent. Sometimes she would pay it in change.”

It’s unlikely a traditional bank would have approved a similar loan, Hernandez said, adding that they typically only approve loans for much larger amounts in order to make a profit, and require financial documents such as balance sheets, bank statements, as well as collateral.

Brian Reed, CEO of Summit State Bank, which earlier this month donated $100,000 to support Creser Capital’s microloan program, said some of the lending restrictions have to do with the amount of risk banks are able to take on when approving loans.

Without historical cash flow data for the past couple years, bank statements and collateral, such as a home or inventory, new businesses “are in essence ineligible for financing,” said Brandy Seppi, the bank’s executive vice president and chief lending officer.

“We take in other people’s money for deposits and lend it out, and what (regulators) want to make sure is that we are lending out our community’s money in a safe and sound manner,” Seppi said.

Hernandez believes Creser Capital is filling a need in the community by not only providing small loans to a larger swath of Sonoma County, but by also pairing the service with step-by-step, culturally responsive education about the borrowing process.

The nonprofit, which approved five loans over the summer, submitted its application to become a Community Development Financial Institution in mid-September and should learn if it has been approved in by the end of the year, Hernandez said.

The nonprofit, which has raised $1 million so far, hopes to open its Santa Rosa office in January, though that will depend on COVID-19 restrictions in the building, he said.

Currently, only two other organizations are certified in Sonoma County as Community Development Financial Institutions, according to data from the Community Development Financial Institutions Fund, the agency that oversees them.

Even then, “there’s no (local) CDFI’s with a mission like the one we have, which is bringing in the Latino community,” Hernandez said.

United Way of the Wine Country, a charitable nonprofit organization, is another investor in Hernandez’s project, said Lisa Carreño, the nonprofit’s CEO and president.

She said the project is in line with her organization’s focus on building financial stability among local families and equity.

When examining successful avenues out of poverty and into wealth building, small business ownership is the most accessible and has the power to create ripple effects that impact not only the business owner but also their employees, their families and the community at large.

“From the restaurants that are locally owned, and family-owned, to the grocery stores, to the auto mechanic and so on, when we are investing in those small economic engines, we are investing in those individuals and their families,” Carreño said.

You can reach Staff Writer Nashelly Chavez at 707-521-5203 or nashelly.chavez@pressdemocrat.com. On Twitter @nashellytweets.

Nashelly Chavez

Diversity, Equity and Inclusion, The Press Democrat 

Who calls the North Bay home and how do their backgrounds, socioeconomic status and other factors shape their experiences? What cultures, traditions and religions are celebrated where we live? These are the questions that drive me as I cover diversity, equity and inclusion in Sonoma County and beyond.   

 

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