Last week, we celebrated an important milestone for one of our micro-loan clients: the grand opening of Los Originales Tacos Árabes de Puebla’s new food truck. The event was a remarkable ceremony that honored culture, family, entrepreneurship, and of course food.
We met Merced and Alfredo Villegas, the owners and operators of Tacos Árabes in 2015. They had been running a successful business selling “tacos árabes,” tacos with specialty marinated pork cooked on a spit. The Villegas, along with their staple product, hail from the Mexican state of Puebla where history says that Lebanese immigrants settled and influenced the development of these special tacos.
Merced, the matriarch of the family, had a vision of growing their business by buying a full-service food truck, an expansion from the hitch trailer they had been using for three years. The issue, however, was how to secure the capital they needed to retrofit the truck they had saved up to buy. Through the Semi’a Fund, LURN’s micro-loan program, we were able to deploy a loan to support the expansion. It was a relatively easy loan to underwrite for this family who works hard every week to sell the best product possible and demonstrated a clear commitment to their goal.
We were excited when Merced dropped by the office to personally invite the team to the truck’s inauguration. (Merced insisted that we show up, especially because she had a vegetarian plate ready for Rudy.) As the team gradually convened at the corner of Olympic Blvd and Esperanza in Boyle Heights (their regular location), we couldn’t help but be blown away! There we were standing before a dream that took three years to cook (pun intended); the truck was beautifully wrapped in artwork by Ernesto Yerena that honored their home town of Puebla. Their newly designed logo is crisp and modern. Flowers and ribbon decorated the front of the truck and we were shocked to find LURN’s logo permanently embedded into the design of the wrap!
The celebration also included champagne, two mariachi groups, cake, and free food! It was kicked off by a heartwarming blessing by a local priest who spoke about the importance of faith, family, and community. If you were there, it would have been clear to you that this business is built on these core values. Their commitment to family is especially palpable.
If you show up to eat at Tacos Árabes, you’ll find the entire Villegas family carrying out their assigned function. Each family member has a role: marinating the meat, preparing the salsa, placing the meat on the spit, etc. But it’s not only the same blood that pumps through the veins of the Tacos Árabes team, it’s also Puebla. Merced and her family go through the painstaking process of making sure their food is true to their homeland, so much so, they make weekly trips to Tijuana where they meet their envoy who delivers ingredients from their hometown. It’s not uncommon for customers who long for a taste of Puebla to rave about Tacos Árabes and how their food brings nostalgia of home. In fact, during the grand opening they were mostly surrounded by “regulars” including a woman who shared that she drives down weekly from Santa Barbara to have dinner at the truck!
This level of connection between Tacos Árabes and their customers also makes them a vital business in the community. In appreciation for their support, Merced insisted on dolling out free dinner (we started with mole over chicken and ended with tacos árabes), to everyone who came. After three hours of non-stop cooking and serving, the family was looking forward to closing the line and hanging out with their customers. But when a few stragglers showed up, they immediately made an exception to serve them dinner because “son regulares” (they are regulars).
Taken all these characteristics together, it’s not far fetched to see how they became a part of the Semi’a Fund program. Unfortunately, it was also a reminder that capital is typically very hard to come by even for entrepreneurs like the Villegas.
Everytime we encounter entrepreneurs like Merced and Alfredo, we realize how insufficient the current financial services systems are. The services and products available from the vast majority of mainstream lenders are simply not designed to support entrepreneurs in low-income communities who need capital for their business and have the capacity to pay it back. It’s widely known that Black and Brown entrepreneurs struggle to get capital to grow their businesses, and because of that, over half of Latino entrepreneurs have to tap into personal savings to get their business going (imagine if you have little in reserves, how would you begin?). Even basic lines of credit are sometimes hard to come by, and many lenders have strict base requirements that filter out otherwise great candidates for a loan. If you’re an entrepreneur that doesn’t yet have 1-3 years of experience with your business or solid financial statements, it will be difficult for you to get a loan.
Our work with Tacos Árabes exposed the access to capital problem further, especially as we worked with them to find a manufacturer that could retrofit the truck. Even when they identified a food truck manufacturer that was willing to work with them, they experienced delays in their project timeline largely because the manufacturer, a start-up themselves, didn’t have enough working capital to complete their project on time. When loan programs are overly restrictive, we not only hurt the businesses we come across, but the network of other businesses that may support them.
To this end, we believe that underwriting standards of mainstream lenders need reform. Lenders need to meet entrepreneurs where they are, and expand the variables they look at when they are deciding on whether a borrower can pay back their loan. Sure, a borrower’s financial situation should be properly assessed, but there are other variables that should be taken into account with the same amount of priority. What about an entrepreneur’s grit? What about their commitment to their business, family, and community? What about their track record of hustling and problem solving?
But for capital to find the way into the hands of people that could use it, lenders need to also reframe their work, moving beyond simply looking at a borrowers’ profile but looking at how they themselves are doing their job. Are they challenging themselves to be more creative about how they deploy their capital and how they use the “guarantees” that many of them secure through government and philanthropic sources? We often see lenders whose investments are guaranteed by federal government only being more conservative in the approach.
At the end of the day, the role of a lender should be to facilitate the achievement of dreams, not overburden them with criteria that seems to be designed to keep people away from economic success.
By Azusena Favela and Rudy Espinoza