Small businesses that survive and grow with microcredit

n a little over three years, the collapse of the microfinance sector left almost 300,000 clients of all sectors, sizes and areas of the national geography without coverage, and without income, a similar or greater number of people throughout the country. country.

“As of December 2017, we were serving around 600,000 clients, and now almost 50% less. Failing to attend to all these businesses represents an enormous damage to an economy as informal as ours, in addition to reducing the flow of money circulating, �?said Julio Flores, president of the Nicaraguan Chamber of Microfinance (Asomif).

The economic recession that began in April 2018, when government repression killed more than 300 people and suddenly slowed down the dynamism of the country, led to an economic depression that led to the closure of thousands of companies, and the destruction of hundreds of thousands of jobs.

But not all of them failed or were limited to subsisting.

In the midst of this sea of ​​lost hope, there are also stories of microentrepreneurs who were lucky, who worked harder, who did not stop honoring their debts, and who believed that they were capable of moving forward, earning little or earning much more than before, and who are still standing, despite the economic and social crisis that surrounds them from all sides.

This is the testimony of five small businesses that survive and thrive on credit from microfinance companies.

Living off plants

Sofía Guerrero, from Catarina, is a 57-year-old woman who has been selling plants for more than half a century, since she started helping in the family business since she was six years old. Five decades doing the same, allowed him to go from a time when he got up at 1 in the morning to travel by bus to Chinandega with a basket full of plants, to owning a van, a truck, and more than half a dozen houses. : his, the ones he built for each of his five children, plus the ones he rents.

The key to making this economic leap is microcredit, which he accessed about 20 years ago, when he began working with Finca, and then ProMujer, FAMA, and Alternativa, until he reached FDL.Selling plants in Catarina is Sofía Guerrero’s business. Photo: Courtesy

“The loans have helped me a lot to prosper, because I have managed to manage the money: half, for improvements, the other half, in the business. We buy and plant plants, although I also buy furniture in my brother’s workshop, and in other workshops, �?he said.

Despite living in such a picturesque place as Catarina, Doña Sofía does not have her own section where she can display and sell her products, because in any case, she does not depend on national and foreign tourists who come by the thousands to that place. Her thing is to load the truck that she bought several years ago for $ 8,500, putting together the $ 6,000 from a loan that a brother of hers obtained in Ficohsa, with the 2,500 that she had been able to save.

Although she does not deny the effects of the economic recession and the covid-19 pandemic, Sofia has not stopped going to the apartments to sell, remembering that in 2018 she went “to Pearl Lagoon, to Kukra Hill, where I made a sale very big, and I managed to pay my installments, because I take great care of my credits �?.

He says that, even with the pandemic, he has gone to sell to Ciudad Rama, Nueva Guinea, Ocotal, Jalapa. “People who like plants buy from you over and over again,” and their price is not very high: 80 to 100 córdobas, he explained.

What has declined is the sale of furniture, because many of those who buy from it are remittance recipients or retirees. Even so, she has clients to whom she delivers furniture in their homes, although the purchase orders are made by relatives of those clients who live in the United States, Panama or Spain, from where they make the payments via remittance.

Spare parts grow amid the crisis

Hansell Maltez, in Managua, owner of Motorrepuestos Emanuel, also has his own success story, going from being someone else’s employee, to owning a business that sells motorcycle parts, and owns his own repair shop.

“I started on this six years ago. Before, I worked in Masesa, selling spare parts in the north and center of the country. Later, I was a road salesman with a truck all over Nicaragua. One day, returning from Granada, they kidnapped me and released me in a riverbed in Ticuantepe, so I was afraid of the route, in addition to that in those days, I read about similar assaults on other routes �?, he details.

Suddenly, he realized that he knew the providers, and he already knew what people were looking for, so he decided to try it on his own. He sold his Honda Civic for $ 3,000, and pooled the money with another $ 2,000 that his mother borrowed, to begin picking up orders, buying parts, packing them, and shipping them as parcels by intercity buses, until they were shipped. It happened to him to put a point in Managua to sell at retail.

He looked for and rented a small place. Then he decided to rent a bigger one, which cost a lot more, “and that was the boom. I started to sell spare parts, and I started the motorcycle workshop, which increases the sale of spare parts �?, he confirms.

In parallel, it was making a name for itself in the world of microfinance. If at the beginning, it was his mother who took out the loans for him, “because they didn’t know me,” the legalization of his business allowed him to access his first loan for $ 1,500, which he invested and paid off in six months.

Then he got another 3,000 that he paid in 12 months. Then a $ 5,000 one, “but with a surety�?, until Fundeser considered that he could give him $ 10,000, which he used for inventory, making an effort to pay it off before the given deadline.

With the crisis of 2018, he saw how the streets were closed, and he was afraid of the possibility that his business would be looted, but he never had to close, while he saw that others failed, because they did not even have to pay the rent.

The pandemic declared in 2020 did not make a dent either, to the point that “I was able to open another store, because more customers were arriving and I had to hire more workers: if I had a mechanic before, now I have six,” he declares.

Looking ahead to this year, he says that “my wife and I, my friends and family, we wonder what could happen in this election year, because we try to be prudent. I was thinking of opening a business to import my own spare parts, but we’d better wait �?.

A businesswoman, selling coal

16 years ago, Azalia García was a worker in the free zone, with a six-month-old son, whom she did not want to leave in the care of other people. Today, she is a businesswoman who sells firewood and charcoal in Masaya, who looks after motorcycles and bicycles, and rents a warehouse to a friend.

When she decided to start a business, she spoke with her husband, who was financed by ProCredit, but they told him that they couldn’t offer him less than $ 3,000, and she wanted about $ 17,000 to 20,000 córdobas (about $ 1,000 to $ 1,200 in 2006). After a couple of years, he changed companies.

“I went to FDL with my credit record, and they did not hesitate to open their doors for me, putting the loan in my name, not my husband’s. Only the first year did they ask me for a guarantor. After that, not anymore. I take care of my credit record, and they have never claimed me for anything “, he assures.Azalia García is dedicated to the sale of coal. Photo: Courtesy

Not even in 2018 defaulted on its credit obligations. Remember that he weathered the roadblocks to pay, while others asked for restructuring and deadlines.

Thanks to that culture of payment, but also to an entrepreneurial spirit, Azalia remains firm. During 2018 “sales fell, but people always came to buy. I sold basic grains, vegetables, cheese, cream, eggs (wholesale and retail), and I have a parking lot for about 100 motorcycles a day, plus bicycles. When the market closes, I continue to attend �?, he assures.

That allowed him to finish paying his loan in 2020, and take out another one in March 2021, for $ 4,100, to stock up on charcoal (100 bags full of charcoal cost 16,000 córdobas, and the price can go up to 22,000), and firewood , and to make improvements to the house, which “was made of board, it was falling.”

Now it is built with quarry stone and pearls. She has gates, a wall, and she built a warehouse that she rents to a friend. “People believe that coal does not generate, but with this I have supported my children, who have already obtained technical degrees; I have a 50-inch TV, and the man asked me for a motorcycle. I have never taken out a device on credit in any commercial house �?, he boasts.

“There are good and bad days. When they are good, I save. When they are bad, I adjust for food and invest the rest, but right now we are on hold for the elections, because this is going to get ugly. They go around saying that banks are going to expire, but the one who does not have a good mind expires “, he concludes in reference to those who misuse loans.

 Selling shoes in Costa Rica

Hollman Torrez entered the family shoe store business in 1984 “out of responsibility.” Almost four decades later, he owns his own workshop, and his shoes have been sold in Costa Rica and Panama.

At the beginning of the 90s, he took out his first loan with Chispa, which had solidarity groups of five people. Eventually, the promoters offered him financing for himself, after checking his ability to pay, and inspecting his workshops.

At the beginning of this century, he began working with FDL, using the loans to improve his house, build a formal workshop, buy equipment, lasts, motors, and hire twelve workers at one point. Until 2018 arrived. And 2020.

“The pandemic is the heaviest thing that has happened to me since I have this workshop. That, plus the situation in the country, has many of us throwing in the towel. I have been able to continue, because I have a solid situation, and an established market that already knows me, but if this continues like this, who knows if we finish the year �?, he warns.Stores that sell used shoes are a comfortable alternative to solve the need for footwear at lower prices. Photo: Courtesy

His problem is aggravated because “the price of raw material has skyrocketed, and people in the market stores do not accept higher prices.”

While prices rise on the one hand, sales fall on the other. Torrez says that he had a client who bought him 100 pairs of shoes and paid for them immediately, but that client is thinking of closing – because she no longer sells, while she must face high rent and electricity costs – and perhaps dedicate herself to selling food or smoothies, because you are only earning to eat, and pay your day-to-day expenses.

“I try to convince them not to get demoralized and not throw in the towel,” he says, recalling that, of those 100 pairs of shoes, now he only receives 20 pairs, and on credit.

“I have told my clients: if we survive the pandemic, next year we will recover, because those who have money have it withheld, waiting for the elections to pass. The same thing always happens, and this year will be worse because of the pandemic. I believe that the one that is stronger, and has the most market and capital, will survive, even if it is from microfinance institutions �?, he stated.

A grocery store in Tisma

Having studied until the third year of Business Administration, and having access to credit, allowed Máryuri Gutiérrez to go from attending a kiosk in a school, to managing a grocery store in Tisma, whose basic merchandise expands according to the seasons of the year.

“In 2006, I began to work with small loans that they gave us in Zero Usury, but I stopped using them because the terms were very short, and then they cut them without prior notice”, so he submitted an application to FDL, where they gave him 20 000 córdobas in loans that he renewed, until the trust generated allowed him to obtain 5000 dollars to buy merchandise for the store, and bales of used clothing.Grocery stores are one of the most common businesses, which not only create jobs, but also facilitate the day-to-day life of consumers. Photo: Courtesy

Until 2018 arrived, and he found that “we could not go out. I couldn’t go to Masaya to buy �?. Nor to pay, so he began to travel to Tipitapa, to pay at the local branch, thanking that “FDL did not charge us in arrears, because he understood that it is not that we did not want to pay, but that we could not.”

Traveling in the company of her husband, she took the opportunity to buy merchandise and food to resell, because “it is useless to have the money, and not have products. There was a lady who half supplied us, but I was left wondering whether to leave that to feed the family, or to maintain the business and pay the fees �?, she recalls.

Since the beginning of the covid pandemic, “people are afraid, they are out of work, and those who plant are losing, because there are no prices for their products, but they must pay their loans, because the banks are not going to forgive their debts , nor to wait for them, so they run the risk of losing their homes, “he said.

His business is maintained “with what little we can sell. I sell and reinvest my income �?, but also thanks to what he learned at university, which allows him to“ prepare balance sheets, income statements, know how to manage the existence of products, and how to promote them to customers �?.

Remember that, while you were working with the loan money you had in effect at the end of last year, in December 2020 you were informed that you could get an express loan, to invest in the Christmas season, so you took out 2000 dollars, which you used to buy gunpowder , and paid it within the established period, which was one month.

Now, he just hopes that the electoral process is calm, and that there will be no more maquilas closing.

His hope regarding the voting is “that people will not come out to protest, because if this breaks down, we will no longer be the second poorest country in Latin America: we will be the first. This is worrying, it is desperate, “he exclaims while praying that there is no more unemployment, especially in the free zones that” generate more than half of the employment. If they close them, this will be worse �?.