The financial institution is registering a strong increase in online loan applications
James Gutierrez launched Aura in 2014 to make loans to people without access to traditional lines of credit (cards or bank accounts) and today this CDFI does nothing but serve people, mostly Latinos and immigrants, who have been among the sword and the financial wall for the coronavirus and show flexibility to facilitate payments.
Two weeks ago, requests for credit on its website grew 200% and in a double-digit percentage in general terms.
"I am surprised but this is all new," Gutierrez explained to this newspaper.
A CDFI or Community Financial Development Institution, is a type of institution that receives funds from the State so that they can leverage (borrow) private funds that are used to finance projects and individuals with low and medium resources.
"In Aura we make loans that go from $ 300 to $ 4,000 but the average of those that are processed is like $ 1,500," he explains. Its clients are people who do not have credit cards or would not get a loan from a traditional financial institution because they do not have accounts or credit histories that are key to it.
Now, the challenge of living with just the right thing paycheck Y paycheck It is even more difficult and that is why this firm that works in California, Arizona, Texas and Illinois, is looking for a way to serve its customers and the demand for the product they need in a different way.
The numbers of online petitions have exploded due to the need for more people and for the same reason that everything is handled in quarantine from homes. Aura does not have independent offices, but its 1,200 locations are located in shopping malls such as the Northgate Gonzalez supermarket in Los Angeles. Outside of this city, Aura loans can be found at DolEx, Order Express, Check Center and Done!
Aura reports to credit bureaus to help her clients, who can apply with ITIN, create their credit history. The maximum annual rate that applies is 36%.
In the first week of confinement, there was no significant rise in delinquencies that are low, according to Gutierrez. However, Aura has offered its clients the possibility of negotiating a delay in payments. "They can skip a payment, we will move it back, our message is that they have to focus on their family and their health, they have to call us to delay payment and not report to the credit bureaus," explains Gutierrez.
From the start they have received thousands of calls to access this flexibility and Gutierrez says customers are grateful. "There are many who are telling us that they live in very difficult situations in which they cannot work and are sick."
"We want to generate optimism and hope," says Gutierrez, who affirms that at this time is when you have to be more united, keep calm and be calm with loved ones.
In Aura, there was concern that customers had difficulty making their payments because 60% of them do so in stores. For this reason they have added CVS as places of payment, and they are encouraged to call them by phone or online.
Gutierrez admits that this economic situation is a challenge for all companies "and especially for those who are lending to the most vulnerable." Her clients have an average income of $ 38,000 a year and 50% or more do not have a credit rating (derived from a credit history).
This businessman explains that the check of a linear payment of $ 1,200 can benefit some of the clients as well as the improvement of unemployment benefits. In Aura they want to make more loans but in crisis they have to be more selective even when there is capital to lend like in Aura.
If the workers have a source of capital, unemployment insurance, they will be able to continue making loans, as they also want to do for those who receive the state payment check.
We have 200,000 active clients and we want to work and be on their side, says Gutierrez, explaining that they are designing new products for these times.
The fourth aid package
James Gutierrez is hopeful that in the next federal stabilization aid package that is already being discussed there will be financing for companies with specific missions in the loans they make like CDFIs.
"Investing more in these funds" directly reaches the communities where they are most needed, "he says.
To a large extent this is a solution so that workers who are the most impacted and need an option can go to better-financed CDFIs and payday lenders.