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Immigrant entrepreneurs benefit by improving credit scores

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On a recent afternoon, I met Luis Estrada at the nonprofit culinary incubator where he preps food for his small food-service business, D’Maize Catering. The commercial kitchen is shared by multiple food-related startups in San Francisco’s Mission District, a mostly-Latino, working-class neighborhood that is rapidly gentrifying.

Estrada was grilling chicken marinated in a soy and mustard sauce. He calls it Salvadoran bistro cuisine, and says his mission — in addition to growing the business — is to bring a more sophisticated version of Salvadoran food, with Asian and California-cuisine influences, to the market.

The business, which he runs with his wife Zenaida (she’s the business manager, he’s the chef), has been helped by several zero-interest microloans from the nonprofit Mission Asset Fund. They’ve used the money for expanded distribution and marketing.

The Fund organizes community lending circles — they call them “cestas,” Spanish for a basket like one that might be passed around for church collections. Each cesta has a half-dozen to a dozen participants. Each participant contributes a fixed amount, say, $100 per month. And each month, the next borrower in line takes the pot, say, $1,200 for a group of 12.

Estrada says his wife doesn’t want to take on high-interest debt from a regular bank or other lender. By paying down their Mission Asset Fund loan, they should improve their credit score and eventually qualify for lower-interest small-business loans. A recent study by San Francisco State University’s Cesar Chavez Institute found that the typical Mission Asset Fund borrower improved their credit score by 168 points on average.

Not every immigrant entrepreneur is trying to establish credit, though. Some need to repair it.

At the Mission Asset Fund office I met 51-year-old Leticia Montes Perez, a mother of four.

She came to the U.S. from Mexico in 1987.

“I am so stubborn,” she says of herself. “I started cleaning houses, and I started opening checking accounts in the banks, and then I bought my own home, and then I bought another house. But really, I didn’t know how to work the system in the U.S.A.”

By the mid-2000s, Perez had a profitable rooming house and was managing around fifty tamale carts with her business partners. Then, it all fell apart: recession, foreclosure, a messy divorce.

Now, she’s starting over. She’s borrowed several thousand dollars through a series of Mission Asset Fund cestas and another nonprofit microlending program for startup businesses. She’s used the money to get city food-server permits and to develop a new type of street-cart.

She’s focused now on improving her credit score. “It was like 350-something, and now it’s close to 635,” she says. “I was so trusting that I lost everything. This time I’m by myself. No business partners, no husband. And in the bank, it’s just my name.”

Leticia’s Mex Churros and Tamales, as she calls her new food cart, will be plying the streets of San Francisco soon.

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