Treasure Valley program aims to wean people from payday lenders

Manny Velasco had plenty of hustle when he owned, at different times, three Mexican restaurants in the Treasure Valley, starting with Los Mariachis near the intersection of West Fairview Avenue and Raymond Street.

Velasco’s brand of on-site advertising — dancing with a sign on the sidewalk outside — earned him the nickname “Mariachi Loco.”

His food was good, he says, but the financial side of the business — juggling employee costs, rent and utilities, food orders and everything else — was a struggle. So he left Los Mariachis to run Cinco de Mayo near the corner of West Ustick and North Five Mile roads. Then he closed that and opened Cabo Grill on East Linden Street near I-84 in Caldwell. He left that business in 2012 and now is director of culture at the Hispanic Cultural Center of Idaho in Nampa.

Velasco says he did not understand finances well enough to earn profits that would allow him to stay in business. “Part of why my business went broke is I didn’t know what to do when I needed more money for the business, or how to deal with expenses,” Velasco says. “If I open a business again, I’m ready.”

His new confidence stems from taking financial-literacy classes through the Treasure Valley Bank On program, one of 60 such programs organized by United Way branches across the U.S.

The free classes teach strategies for saving money, budgeting, tracking expenses and shopping for the best loan terms. Graduates receive certificates that make them eligible to open accounts at any bank or credit union in the Valley, regardless of their banking or credit histories. Twelve banks and credit unions contribute employees to teach classes.

Gavin Gee, director of the Idaho Department of Finance, says the program is an effort to offer conventional financial services to the 21 percent of Valley residents who are either unbanked or underbanked, meaning they use either no or few bank and credit card services. The unbanked and underbanked pay premiums for services, such as cashing checks, that they could receive at low cost or for free at banks and credit unions.

The unbanked and underbanked also tend to turn to payday lenders, whose high-interest-rate loans sometimes exacerbate financial crises, Gee says.

“It’s one thing to take out a single loan on a one-time basis and then pay it off,” Gee says. “It’s another thing to get in the payday-loan trap of borrowing multiple payday loans to pay off multiple payday loans.”

Many Spanish-speaking Latinos avoid banks and credit unions because they cannot understand complicated financial terms in English, says Humberto Fuentes, president of the Hispanic Cultural Center. That distrust and unwelcome feeling worsened in the economic downturn, after many Latinos earning good wages building houses found themselves suddenly unemployed, he says.

The Cultural Center now hosts Bank On classes taught by bilingual teachers. One class was taught by Olga Menchaca, branch manager of Washington Trust’s Idaho Center branch in Nampa. Menchaca says she also has taught a week of courses at the Caldwell Housing Authority office. Twenty-nine students attended the two classes.

Menchaca says a secondary goal of the program is to persuade people who distrust financial institutions or who have been flagged for bank hopping to return to mainstream banking.

“Even if they are on the naughty list, they can go through this program and get a second chance,” Menchaca says.

At Washington Trust, program graduates are monitored for 90 days for warning signs, such as overdrafts.

Menchaca says instructors are prohibited from displaying which bank or credit union they represent, though they can respond if asked.

Many students do not complete the coursework. Ninety-six people have graduated during Bank On Treasure Valley’s first two years, less than a quarter of the number who registered for the courses. Gee says state and United Way personnel involved in the program are concerned that some who register struggle to fit the classes into busy schedules.

Still, Gee says he hopes the program gains traction in the Valley and beyond.

“We’d like to see this program operate statewide,” Gee says. “The challenge there is with every other large community in the state, we’re also dealing with a separate United Way.”

Verasco — the Mariachi Loco — says he may open another restaurant, though he is enjoying his current job. He wants other Latino business owners to avoid his money management mistakes.

“Don’t be afraid to take classes,” he says. “You might work hard. You might know how to cook. But there’s so much more to running a business. You have to educate yourself.”