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Progreso Financiero founder leaves the immigrant loan specialist

March 27, 2012|By E. Scott Reckard
  • James Gutierrez, left, is leaving Progreso Financiero, an innovative lender to low-income Latinos that he founded in 2005. The Los Angeles Law and Justice Center last week honored Progreso as company of the year, with "CSI: Miami" star Adam Rodriguez, right, introducing Gutierrez, a longtime friend.
James Gutierrez, left, is leaving Progreso Financiero, an innovative… (L.A. Center for Law and Justice )

Founder James Gutierrez has stepped down as the head of Progreso Financiero, which makes small loans to immigrants by relying on their "moral collateral" and a secret scoring system for people with little or no credit histories.

The Silicon Valley-based lender, backed by major private investment firms, is widely regarded as a leader in the tricky business of providing a lower-cost alternative to payday lenders.

In an interview Monday, Gutierrez said the time had come after seven years: Progreso now employs 600 people and makes loans at more than 80 sites in California and Texas. Having operated in the red so far, the privately held company is now on track to become profitable this year, he said.

Progreso named as acting chief executive Dave Tomlinson, a veteran financial executive who joined the company as chief operating officer in 2009 and added the title of president in 2010.

As a "serial entrepreneur," Gutierrez said he hopes to start a fund that would back ventures with a social purpose, such as a PayPal-like system for people without bank accounts.

Having stepped down Friday as Progreso's chairman and chief executive, he said he'll be spending more time with his wife; the couple is expecting their first child in five months.

Gutierrez, grandson of a Mexican immigrant, was a Stanford MBA candidate in 2005 when he founded Progreso, initially making loans himself at a Latino market in San Jose.

Progreso has now written about 300,000 loans. The typical borrower repays a $1,000 loan by making two $60 payments a month for 10 months -- a total of $1,200. The company reports the payments to credit bureaus so its customers can build a conventional credit history.

The legal-aid nonprofit Los Angeles Center for Law and Justice honored Progreso as its corporation of the year on Thursday, a day before the company announced his departure. "CSI: Miami" star Adam Rodriguez, a longtime friend of Gutierrez, provided the introduction.

Appearing emotional, Gutierrez explained how his company devised an "eHarmony-type questionnaire" to gauge the likelihood of customer repayment.

He also read from a note written to him in 2009 by a woman who said Progreso had transformed her life and that of her husband and son.

She said a loan enabled her husband to buy tools, get a construction job and work his way up to a position as a crew leader. Repaying the loan created a credit history, enabling the family for the first time to find an apartment they didn't have to share with others, she wrote.

"We started from zero and now we're somebody," she wrote in Spanish. "I hope my letter inspires you to keep fighting for those of us who don't yet have a voice in this country."

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