For much of two decades, Esmeralda Hernandez's small flower and party-supply business in the East Los Angeles neighborhood of Boyle Heights has supported her and her four children. It was a step up from the difficult factory work that she did before striking out on her in own 1994.
Still, sustaining, much less growing, her business has been a struggle. There were temporary closures. She moved locations three times. Her limited cache of party supplies—she couldn't afford to acquire more—meant that she could book her work only one event at a time. Traditional finance vehicles like bank loans were out of reach.
"I don't have credit," said Ms. Hernandez, 55, a Mexican immigrant who became a U.S. citizen in 1997.
Then last year she seized a chance to join a five-woman microloan group that would give her access to modest amounts of capital at 15-percent interest, well below rates offered by predatory loan sharks. The opportunity came as part of a soft -launch in Los Angeles by Grameen America, a nonprofit microloan organization that puts capital into the hands of poor women business owners largely excluded from the mainstream financial system.
Now Ms. Hernandez is on her second loan: A total of $3,500 in capital has allowed her to purchase tables, chairs, and two sets of silverware. And the nonprofit has announced plans to channel $650-million to 91,000 small, women-owned businesses in Los Angeles County, building on the $4.2-million already invested.
It’s a dramatic ratcheting up for Grameen America, which was previously concentrated almost entirely in New York. The nonprofit has invested about $200-million with 37,000 women business owners since its founding in 2008.
The Los Angeles expansion got it’s start with $4-million in funding from multiple community partners. The California Community Foundation contributed $2.5-million, including $500,000 in grants, $1.5-million in loans, and $500,000 in donor-advised funds.
Other supporters include Whole Planet and the Ahmanson, Conrad Hilton, Parsons, Rose Hills, and Weingart foundations. Community-reinvestment loans from banks are also part of the overall financing mix.
The extreme wealth, extreme poverty, and burgeoning immigrant population that exist in Los Angeles County make it an ideal laboratory for the Grameen mission, said Antonia Hernandez, chief executive of the California Community Foundation.
The Grameen model began to take shape in 1976 in Bangladesh under the leadership of Muhammad Yunus. It has since expanded internationally and earned Mr. Yunus the Nobel Peace Prize in 2006. Speaking late last month at an event marking the expansion into Los Angeles, Mr. Yunus described the effects that microfinancing can have on communities, families, and women.
"When she pays back the first loan, she feels so tall," Mr. Yunus said. "She feels like she can conquer the world."
Andrea Jung, the former Avon Products chief executive who took over at Grameen America in January, said the nonprofit will continue to expand nationally in the coming years to cities including Austin, Texas.
"I think it is an extraordinarily powerful statement: The poorest country on earth having a solution to solve the richest nation’s issues," Ms. Jung said.
In East Los Angeles, Esmeralda Hernandez and the other members of her microloan group went through a five-day training session on money management and financial discipline before receiving their first checks. Ms. Hernandez paid back her first $1,500 loan in weekly installments of $73. Now working with a new $2,000 loan, her weekly payments are $84, a manageable sum, she said. The additional party supplies the capital allowed her to purchase means her business can now take on more than one event at a time. And there is more to come: She already has her eye on a $10,000 professional-grade wedding tent.
"I’ve always seen her as an empowered woman," said her 24-year-old daughter, Aurora Godinez. "But now she is even more so."