If not having a credit record in the United States is like not having an identity, there are roughly 23 million faceless Hispanics who need help.

And James Gutierrez, CEO of Progreso Financiero, believes his innovative lending company is just the thing to offer that hand.

“We’re providing economic citizenship,” he said.

Progreso, which recently opened an outlet in Redwood City, helps build credit for customers who can’t get a foot into the traditional financial realm.

But Gutierrez is quick to say helping his community is about a helping hand, not a handout.

Progreso offers microloans averaging $1000 to those whose lack of a credit score otherwise kept them unable to qualify for more conventional banking loans and sometimes turning to the predatory and outrageous interest rates of payday loans.

Typically within two to three loans, a client has built up enough of a score to rent an apartment, buy a cellular phone and work his or her way to a mortgage, he said.

Progreso asks for three things — proof of identity, residence and income — to gauge credit worthiness. Rather than looking at property to secure the loan, Progreso relies on what Gutierrez calls “moral collateral.”

Aside from its repayment scoring model, Progreso requires borrowers to make in-person contact to repay the money for the life of the loan. The average borrower could have 15 to 60 unique visits — each of which Gutierrez said helps keep their default rate low. The average customers pays no more than $100 in interest for a typical eight-month loan, according to Gutierrez.

Borrowers are less likely to resist repaying someone they know rather than a faceless banking entity, he said.

Despite the reliance on its knowledge of the community, Progreso doesn’t discount risk entirely. Not every applicant qualifies and performance is reported to credit bureaus because that is the only way to begin creating a score.

Gutierrez, the son of Mexican immigrants, developed Progress Financial — or, Progreso Financiero — as a student at the Stanford University Graduate School of Business. What began as a research project blossomed into 16 sales spots across Northern California before opening the first stand-alone financial center in Redwood City in mid-September.

The center on Middlefield Road is a test case for future expansion, he said, and also served a large underserved Latino population. Progreso previously had an in-store stand at the Kmart in Redwood City, providing both name recognition and proof that those customers repay loans well.

But more than the progress the company has made, Gutierrez said the real measure of its worth is in the more than 25,000 families benefiting from $20 million in loans offered since 2005.

Despite its growth, the company’s goal is the same — give the working Latino community a way to achieve its dreams.

The challenge before, Gutierrez said, was not that these individuals didn’t have goals but that a lack of FICO score hampered their ability to break into mainstream financial services.

Microlending is a relatively new banking concept although it quickly gained momentum and awareness after Mohammad Yanus won the 2006 Nobel Prize for his efforts. Much of the discussion about microlending has followed suit, focusing on the work in developing countries.

But Gutierrez said domestic areas of need, like those in Redwood City and the North Fair Oaks area, cannot be overlooked.

“There are plenty of people here who also need help and that’s what we want to do,” he said. “We help them move up the ladder and reach those lifelong aspirations.”

For more information:

Loans are offered between $500 and $5,000 although smaller amounts are offered to first-time borrowers. Each loan takes approximately seven business days to process and the funds are released as a check or Progreso purchase cards. Loans require three pieces of information: Proof of address, proof of income (i.e.: pay stubs) and a valid photo identification. Additional documents like tax returns can help in the approval process but are not required. Anyone can apply for a loan but documents are in Spanish.

Progreso Financiero is at 3141 Middlefield Road, Redwood City. The center can be reached at (866) 488-6090 or www.progressfin.com

Michelle Durand can be reached by e-mail: michelle@smdailyjournal.com or by phone: (650) 344-5200 ext. 102.