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Tijuana's MiCredito loans to Daniel Covarrubias' trash truck business
50 to 100 pesos a week to haul away refuse
For decades, Tijuana’s eastern colonias have sprung from the chaparral faster than the municipal government can provide services to them. The resourceful residents in these neighborhoods have long brought electricity to their shanties by running their own wires to the nearest power pole. Other services are harder to improvise. One of them is trash removal, and Daniel Covarrubias Ramírez, a 37-year-old native of Guadalajara, saw a business opportunity in that fact. So he bought an ancient dump truck and started asking residents if they’d pay him 50 to 100 pesos a week to haul away their trash. About 4000 customers took him up on the offer, more than this aging vehicle could handle. He needed another, bigger truck. “Some friends who also have trash-removal businesses told me to come down here and get a loan,” explains the short but powerfully built Covarrubias.
“Down here” is a corner office on the third floor of Tijuana’s square, fortresslike city hall. The office belongs to Hugo César Fletes Pérez, director of the municipal government’s MiCrédito small business loan program. For the moment, Fletes has surrendered his oversized leather office chair to Covarrubias, who seems ill at ease sitting behind the ample cherrywood desk. Dressed in a sage green silk dress shirt unbuttoned to midchest, snug black jeans, and pristine white leather cowboy boots, the balding, red-goateed Covarrubias sits upright and forward, not wanting to look too comfortable in the chair or to rest his elbows on the desk. He continues his story. “After my friends told me about the program, I came down here and spoke to the licenciado,” he nods toward the office door, where the bulky, clean-shaven Fletes leans on the jamb. “I proposed the sanitation project that I had and told him how the truck I had was too old and too small. I showed him what neighborhoods I had an authorization to work in. And I got the loan. It was a loan in record time.”
With the 30,000 pesos (a little under $2800) he was loaned, Covarrubias was able to buy a newer, bigger truck. Would he have been able to continue in business without the loan from MiCrédito? “Not for long,” he answers. “Now I’ve got a newer truck, and I’m having a new engine put in the old truck. So I’ll have two trucks.”
Covarrubias’s trash-collection business is just the kind of enterprise MiCrédito wants to help, Fletes says. “It’s a viable project,” he explains. “It’s a proven business with a good chance of success, and it will also help improve the quality of life of the citizenry. That’s the kind of business we like to lend to.”
MiCrédito was started in June 1999 during the administration of Mayor Francisco Vega. The municipal government put 2 million pesos (about $186,760) into a trust, and the federal government matched it. From those 4 million pesos, they’ve given out “about 2000” loans since the program began. “We publicize it through the local media — print, television, and radio. That’s how people hear about us. Then they come here and request information. And they have to fulfill certain requirements. They need to show a copy of their voting card, a copy of their birth certificate, proof of residency, and a copy of their mortgage, if they have one. They need to make a presentation as to how they’re going to use the money. They give us a map that shows their location. And they show us the city permits. If they don’t have the necessary permits, we help them cut through the red tape to get permits.”
At the time of its inception, the MiCrédito program, Fletes says, “was focused on helping single mothers, seniors, and disabled people. We give them support by consulting with them on how to create their own businesses so they can earn a living for themselves. And we also support them by giving them a microloan. The loan can be up to 30,000 pesos.”
In June 2006, the municipal government initiated a second program within MiCrédito. “It’s focused toward young entrepreneurs,” Fletes explains. “These loans can be up to $50,000 pesos [around $4700]. We don’t simply give them the check. We do follow-ups to see that the business is successful. And we also get support from the University of Baja California and the chamber of commerce when it comes to checking up on the businesses.”
Asked what types of businesses the program has lent to, Fletes waves his hand as if to say, “You name it.” “Cyber cafés, lots of grocery stores, taco carts, bookstores… They’re mostly from the eastern part of the city, though we get them from all parts of town. The only thing we won’t lend to is the unlicensed market. They have to have the appropriate permits.”
Not that everybody who asks gets a loan. “We had a man in here today,” Fletes suppresses an impish grin, “who said he wanted to import a new wall-building product that isn’t cement or drywall. It’s some kind of new product he said is being used in Canada. Whatever it is, it hasn’t been approved for use in Mexico, so of course I couldn’t give him a loan.”
Fletes’s office receives dozens of requests weekly. The ones he doesn’t rule out immediately are decided on by “a technical committee comprising representatives from the city and federal governments. They analyze each proposal and decide on the feasibility of each project or presentation. And we have a target number for loans we give out in a year. This year it’s… Olga,” he calls to the accountant in the next room, “what’s the quota of loans for this year?”
“Two hundred seventy,” Olga yells.
What are the repayment terms?
“If the loan is to restock or replenish your inventory,” he says, “it’s 12 months. But if the loan is to start the business or to purchase new machinery or equipment for the business, it’s 18 months. The interest rate we charge on loans for young entrepreneurs is 12 percent annually. For the single moms, seniors, and disabled, it’s based on the market rate, which is currently around 7 percent.”
By comparison, Mexican banks offer small business loans at 22 to 30 percent.
“Right now, it’s a little less than 2000 pesos [about $187] per month,” Covarrubias says of his payment, “but it’ll go down each month.”
Verenice Villanueva Ponce, a 52-year-old single mom who lives in the Presidentes section of east Tijuana, received a 15,000-peso loan (about $1400) in January to start a perfume retail business out of her house. “My payment is 1400 pesos [about $130] a month, but it will be about 100 pesos [about $9.30] less each month.”
Villanueva and Covarrubias are among the conscientious loan recipients who are actually repaying their loans. “Right now, we have 2.5 million pesos [about $233,000] of loans that aren’t being repaid,” Fletes says. “Some of that is owed by people who made some payments and then stopped. The rest is people who never paid. We have legal proceedings pending on these cases. Because when we loaned them the money, they signed a note saying they’d repay. Legally, we have three years to collect on that note. The problem with that is, in many cases, in order to be paid, we might have to repossess their businesses or their merchandise or their houses. We would legally have to go over there and do it. We would be the villain in the movie if we did that. It wouldn’t look good for the municipal government, so the administration does not want to get involved in that.”
Here's something you might be interested in.
Tijuana's MiCredito loans to Daniel Covarrubias' trash truck business
50 to 100 pesos a week to haul away refuse
Tijuana's MiCredito loans to Daniel Covarrubias' trash truck business
50 to 100 pesos a week to haul away refuse
For decades, Tijuana’s eastern colonias have sprung from the chaparral faster than the municipal government can provide services to them. The resourceful residents in these neighborhoods have long brought electricity to their shanties by running their own wires to the nearest power pole. Other services are harder to improvise. One of them is trash removal, and Daniel Covarrubias Ramírez, a 37-year-old native of Guadalajara, saw a business opportunity in that fact. So he bought an ancient dump truck and started asking residents if they’d pay him 50 to 100 pesos a week to haul away their trash. About 4000 customers took him up on the offer, more than this aging vehicle could handle. He needed another, bigger truck. “Some friends who also have trash-removal businesses told me to come down here and get a loan,” explains the short but powerfully built Covarrubias.
“Down here” is a corner office on the third floor of Tijuana’s square, fortresslike city hall. The office belongs to Hugo César Fletes Pérez, director of the municipal government’s MiCrédito small business loan program. For the moment, Fletes has surrendered his oversized leather office chair to Covarrubias, who seems ill at ease sitting behind the ample cherrywood desk. Dressed in a sage green silk dress shirt unbuttoned to midchest, snug black jeans, and pristine white leather cowboy boots, the balding, red-goateed Covarrubias sits upright and forward, not wanting to look too comfortable in the chair or to rest his elbows on the desk. He continues his story. “After my friends told me about the program, I came down here and spoke to the licenciado,” he nods toward the office door, where the bulky, clean-shaven Fletes leans on the jamb. “I proposed the sanitation project that I had and told him how the truck I had was too old and too small. I showed him what neighborhoods I had an authorization to work in. And I got the loan. It was a loan in record time.”
With the 30,000 pesos (a little under $2800) he was loaned, Covarrubias was able to buy a newer, bigger truck. Would he have been able to continue in business without the loan from MiCrédito? “Not for long,” he answers. “Now I’ve got a newer truck, and I’m having a new engine put in the old truck. So I’ll have two trucks.”
Covarrubias’s trash-collection business is just the kind of enterprise MiCrédito wants to help, Fletes says. “It’s a viable project,” he explains. “It’s a proven business with a good chance of success, and it will also help improve the quality of life of the citizenry. That’s the kind of business we like to lend to.”
MiCrédito was started in June 1999 during the administration of Mayor Francisco Vega. The municipal government put 2 million pesos (about $186,760) into a trust, and the federal government matched it. From those 4 million pesos, they’ve given out “about 2000” loans since the program began. “We publicize it through the local media — print, television, and radio. That’s how people hear about us. Then they come here and request information. And they have to fulfill certain requirements. They need to show a copy of their voting card, a copy of their birth certificate, proof of residency, and a copy of their mortgage, if they have one. They need to make a presentation as to how they’re going to use the money. They give us a map that shows their location. And they show us the city permits. If they don’t have the necessary permits, we help them cut through the red tape to get permits.”
At the time of its inception, the MiCrédito program, Fletes says, “was focused on helping single mothers, seniors, and disabled people. We give them support by consulting with them on how to create their own businesses so they can earn a living for themselves. And we also support them by giving them a microloan. The loan can be up to 30,000 pesos.”
In June 2006, the municipal government initiated a second program within MiCrédito. “It’s focused toward young entrepreneurs,” Fletes explains. “These loans can be up to $50,000 pesos [around $4700]. We don’t simply give them the check. We do follow-ups to see that the business is successful. And we also get support from the University of Baja California and the chamber of commerce when it comes to checking up on the businesses.”
Asked what types of businesses the program has lent to, Fletes waves his hand as if to say, “You name it.” “Cyber cafés, lots of grocery stores, taco carts, bookstores… They’re mostly from the eastern part of the city, though we get them from all parts of town. The only thing we won’t lend to is the unlicensed market. They have to have the appropriate permits.”
Not that everybody who asks gets a loan. “We had a man in here today,” Fletes suppresses an impish grin, “who said he wanted to import a new wall-building product that isn’t cement or drywall. It’s some kind of new product he said is being used in Canada. Whatever it is, it hasn’t been approved for use in Mexico, so of course I couldn’t give him a loan.”
Fletes’s office receives dozens of requests weekly. The ones he doesn’t rule out immediately are decided on by “a technical committee comprising representatives from the city and federal governments. They analyze each proposal and decide on the feasibility of each project or presentation. And we have a target number for loans we give out in a year. This year it’s… Olga,” he calls to the accountant in the next room, “what’s the quota of loans for this year?”
“Two hundred seventy,” Olga yells.
What are the repayment terms?
“If the loan is to restock or replenish your inventory,” he says, “it’s 12 months. But if the loan is to start the business or to purchase new machinery or equipment for the business, it’s 18 months. The interest rate we charge on loans for young entrepreneurs is 12 percent annually. For the single moms, seniors, and disabled, it’s based on the market rate, which is currently around 7 percent.”
By comparison, Mexican banks offer small business loans at 22 to 30 percent.
“Right now, it’s a little less than 2000 pesos [about $187] per month,” Covarrubias says of his payment, “but it’ll go down each month.”
Verenice Villanueva Ponce, a 52-year-old single mom who lives in the Presidentes section of east Tijuana, received a 15,000-peso loan (about $1400) in January to start a perfume retail business out of her house. “My payment is 1400 pesos [about $130] a month, but it will be about 100 pesos [about $9.30] less each month.”
Villanueva and Covarrubias are among the conscientious loan recipients who are actually repaying their loans. “Right now, we have 2.5 million pesos [about $233,000] of loans that aren’t being repaid,” Fletes says. “Some of that is owed by people who made some payments and then stopped. The rest is people who never paid. We have legal proceedings pending on these cases. Because when we loaned them the money, they signed a note saying they’d repay. Legally, we have three years to collect on that note. The problem with that is, in many cases, in order to be paid, we might have to repossess their businesses or their merchandise or their houses. We would legally have to go over there and do it. We would be the villain in the movie if we did that. It wouldn’t look good for the municipal government, so the administration does not want to get involved in that.”
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