Flag outside of Finanta’s offices in South Kensington

Finanta, a community lender located in South Kensington, provides loans and financial counseling to low-income communities throughout Philadelphia. The organization believes that these communities need better access to capital, and to get that access they need to build their credit and increase their financial knowledge.

“For the most part we deal with people who have no credit or have problems with credit,” said Luis Mora, founder and president of Finanta.

The 17-year-old nonprofit secures capital from a mix of government and non-government sources and then channels that money into investment-starved communities. It offers loans for mortgages, business investments, and important consumer purchases such as home renovations and vehicles. Finanta’s financial advisors work closely with recipients to stay on track of their payments and provide counseling based on the purchase or investment they are planning to make.

Credit-building and financial education are as key to these programs as the loans themselves, Mora explained.

Finanta’s PREMOS (pre-mortgage) program, for example, is designed to build credit, encourage savings and prepare people for home ownership. It does this by providing a loan and then requiring the recipient to enter into a curriculum, lasting up to 24 months, that includes a “credit action plan” and homeownership counseling.

During this two year period, Finanta holds onto the loan until it is repaid. The full amount goes to the recipient at the end of the curriculum, as if they had saved the money rather than borrowed it. Mora explains that this program essentially allows the individual to save money by way of loan repayments, while also building credit.

“People see credit as a liability,” Mora said. “We want people to see credit as an asset.”

Other programs from Finanta, including the PRECAPS (pre-capital) and PRECONS (pre-consumer) programs, offer some combination of counseling, credit building and capital. One notable difference is the use of “affinity groups” in the PRECAPS program. These groups consist of business owners and entrepreneurs that join together to request a loan and then help one another stay on top of repayments and attend group workshops. Since 2011, this program has made 281 microloans to 12 different groups, according to Finanta’s website.

Finanta is able to invest in low-income communities because it is a registered community development financial institution (CDFI), a U.S. Small Business Administration Microloan Intermediary, and a participating lender for the Pennsylvania Housing Finance Agency’s (PHFA) home purchase program.

These designations allow Finanta to solicit grants from foundations and from the state and federal government — a task that the small nonprofit apparently has little trouble with.

“It has not been difficult to raise capital,” Mora said.

As Generocity reported last summer, Finanta received $550,000 from the defunct Philadelphia Urban Finance Corporation. Two and half years ago it received $1.5 million from the CDFI Fund — a federal community development fund — for first-time homebuyers. Both of these grants went towards Finanta’s loan programs.

The difficult part, Mora explained, is raising money for overhead. He said that it is a yearly struggle to draw enough money to pay for staffing and other administrative costs. But Mora insists that the organization is stable, and that donations do come even though it can be difficult. Recently, Finanta received $30,000 from Citi Foundation to pay for the overhead costs of the PREMOS program.

“People at banks are trained to say no,” Mora said. “We want to switch that mentality.”

In the meantime, Finanta has applied to the CDFI Fund to fund its PRECON programs, which provides microloans from $1,500 to $7,800 for large consumer purchases. Again, the loan is just a piece of a comprehensive program that focuses on credit-building and financial training.

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