After more than 18 years with the organization, Flanigan-Vazquez’s achievements include overseeing a micro-loan program that originated $35 million to 4,000 borrowers and establishing Justine PETERSEN’s wholly owned CDFI, Great Rivers Community Capital, which originated $40 million to more than 5,000 borrowers. She previously served on IFF’s Community Advisory Committee and was a founding Board member of Choices Federal Credit Union. She’s also engaged in the Latino community, having previously served as the Executive Director of La Casa Latina – a grassroots organization that assists non-English-speaking Latinos – and volunteered for a year of service coordinating ESL classes. She has a Master of Social Work from Washington University in St. Louis.
1. You’ve been with Justine PETERSEN for almost 20 years. During your time with the organization, how do you think the industry of micro-lending changed and adapted?
Justine PETERSEN’s micro-lending focus has always been on low-income, women, and minority entrepreneurs that benefit from small amounts of capital to fund self-employment activities that supplement household income. We provide services and loans to the most historically under-served and under-resourced – the most in need. Our client businesses are primarily in service industries, such as construction, child care, and real estate. The needs of this target population haven’t changed much over the past 20 years. There is unabated demand for this work. Our connection with the SBA Micro-Loan program as a specialized intermediary – with an average loan size under $10,000 and augmented technical assistance – continues to work very well with this target population.Serving these clients is at the heart of our mission.
During the financial crisis as the banking appetite changed, we found ourselves faced with a new client population – the previously banked. These more established businesses had operating lines of credit before the financial crisis and suddenly found financing was not renewed – not due to the fault of the borrower, but simply because of a change in bank policy. This new type of client was more vulnerable in the financial crisis with upside-down mortgages and maxed-out credit cards, and Justine PETERSEN adapted to serve them with products through our CDFI. We also joined the SBA Community Advantage program for the added value of the secondary market.
The latest challenge to the micro-lending industry is online lenders that offer easy access to extremely high-priced financing, often through deceptive practices. This new frontier in predatory lending leverages technology to get capital to entrepreneurs quickly – but at unscrupulous rates and terms. The micro-lending industry is just starting to develop strategies to respond. One strategy is the Small Business Borrower Bill of Rights that is aimed at promoting responsible practices through education. Another strategy is the Association of Enterprise Opportunity’s Tilt Forward / Project CUE, an emerging technology that will compete head-to-head with online lenders by linking denied bank applicants to local CDFIs. Justine PETERSEN is proud to participate in both of these initiatives.
2. Part of JP’s mission is to build assets in low-income communities in St. Louis. How is St. Louis different today than it was 20 years ago? Are the challenges the same or different? Any predictions for the next 20 years?
Justine PETERSEN was founded in the spirit of Justine M. Petersen, a pioneer in community reinvestment who worked with local banks to develop loan products for good homebuyers that had been shut out of the homeownership process due to income or location preference. These loan products, combined with St. Louis’s affordable housing stock, offered the opportunity for families to purchase a home for less than they were paying rent. Assisting low-income families to access safe, affordable mortgages was Justine PETERSEN’s initial work, and more than 4,500 first-time homebuyers are the shining stars of Justine M. Petersen’s legacy. Like me, Justine had a Master of Social Work and worked to weave her MSW with the finance industry to benefit low-income communities.
With the housing boom, our pre-purchase housing counseling work declined as prospective homebuyers were swept away by real estate agents and mortgage brokers with the promise of instant financing. The resulting housing bust led banks to tighten underwriting criteria, and now the lack of accessible home mortgages is a formidable obstacle to building assets.
To overcome this challenge, Justine PETERSEN has embraced the long game by promoting Credit as an Asset. By pairing financial education with credit-building loans, Justine PETERSEN works with families to build a strong credit report and financial balance sheet. We encourage our clients to treat their credit profile as their most important asset, as it leads to access to more affordable financing and asset building opportunities. Justine PETERSEN has emerged as a leader in this arena with our Credit Building Nation partnership initiative. We assist nonprofit organizations that offer financial education to offer a credit-building loan.
In the future, I see a return to our mortgage lending roots, either through partnership with the banking industry or a product through our CDFI. Access to safe, affordable mortgages is pivotal to building assets and strong communities and will re-emerge as part of our product offerings.
3. JP provides both lending and real estate services. Tell us how JP sees the relationship between these two functions and how they work together to serve your clients.
In our early homeownership work, we learned the importance of understanding property conditions when assisting low-income families to purchase homes. With the vulnerability of the low-income family’s budget, unexpected home repairs are the most frequent cause of mortgage loan delinquencies, as families are forced to decide between living in undesirable conditions and paying their bills on time. As a preemptive strategy, making sure that the property is in good condition before the home purchase is imperative.
This passion for quality housing stock led to our real estate services. In an effort to deal with the abundance of post-financial-crisis foreclosure inventory, Justine PETERSEN ramped up its real estate services, renovating bank-donated properties and selling them to low-income families. Pairing quality homes with safe, affordable mortgages provides a foundation for a successful first-time homebuyer.
4. JP is also an IFF borrower, having closed on four IFF loans between 2006 and 2013. Some of those loans were to finance the acquisition and rehab of your own headquarters. Others were to conduct programmatic work – acquiring and rehabbing low-income housing that would eventually be sold to qualified buyers. How can collaboration between CDFIs spark growth and serve communities?
IFF was instrumental in the acquisition and rehab of Justine PETERSEN’s headquarters.Without IFF assistance, we would have continued to rent substandard space that was not as conveniently located for our clients. Our headquarters also offers incubator space for many of our clients that we were not previously able to provide. Our clients benefit by our excellent location, superior rehab, and access to shared conference, copier, kitchen, and other space.
IFF provided financing to jumpstart our real estate services by providing necessary cash flow for the acquisition and rehab of low-income housing. The demand for this type of work skyrocketed after the financial crisis. With IFF assistance, we’ve been able to transition vacant, dilapidated foreclosures into quality first-time homes.
Coordination and collaboration between CDFIs is imperative to building strong families and communities. Each CDFI has its own area of expertise and only by coming together can we begin to close the gap on community needs.
5. Earlier in your career, you did a year of service to coordinate ESL classes and later you served for three years as Executive Director of La Casa Latina. Can you tell us about your current engagement in the Latino community?
I had the privilege of being immersed in the Latino community for several years after obtaining my undergraduate degree in Sociology and Anthropology. Working with the Latino community to overcome barriers and celebrate differences is a special interest of mine. St. Louis has a growing Latino community. Justine PETERSEN has been able to pair its microenterprise technical assistance and lending with the remarkable entrepreneurial spirit of the community to create and grow several local Latino small businesses.