María Olga Calixto and her family run a hardware shop outside of Queretaro, Mexico. Though her husband and children also help out at the store, Maria Olga manages the finances and, more often than not, is the face of the business as she works behind the counter.
“We sell a little of everything: spray paint, tools, bicycle parts — even cement and plaster,” she says. Among María Olga’s many challenges is stocking her shop with enough inventory to meet the needs of her walk-in customers while still maintaining sufficient cash reserves to buy materials when she receives larger special orders.
“We all participate in this business. My children, my husband, and myself,” says María Olga about her family-owned hardware store called Ferremateriales El Vegil.
Before the pandemic, María Olga could depend on short-term credit from her suppliers to cover the costs of unexpected purchases requested by her customers. A quick call to a trusted supplier would mean she could receive products at her door within hours, with the understanding that she would pay for the inventory once she received the payment from her customer. The liquidity within the value chain kept her store afloat while also generating business for her suppliers.
But these arrangements presented complexity for her suppliers, like Materiales San Francisco. In order to extend credit to its small business customers, Materiales San Francisco needs to keep track of outstanding credit, shoulder the risk of default, and manage the complex cost of capital. As the COVID-19 lockdowns extended in Mexico, Materiales San Francisco found that cost of capital skyrocketed, and they could no longer extend credit to their customers.
This change had implications for María Olga and for her customers, many of whom are individual contractors. She says, “I wasn’t solvent then; something was always due. Customers would come, and I didn’t have the cash to buy the materials, even when they were ready to buy.” Furthermore, she wasn’t able to offer her customers delayed payment terms, although many of them only receive payments once their own jobs are complete. “It was complicated before; I would run out of money for inventory. I was losing clients because of lack of materials and because I couldn’t offer [them] credit.”
Then, a year ago, a new partnership between Materiales San Francisco and Caja Bienestar — the largest socially focused financial institution in Mexico — offered a solution. Working with Accion, with support from MetLife Foundation, Caja Bienestar created a revolving credit line for microentrepreneurs, purposefully designed to help their clients stay resilient in times of hardship and improve their financial well-being. Caja Bienestar partners with trusted local distributors like Materiales San Francisco and extend credit to the distributors’ small merchant customers so that they can get the inventory they need for their stores and repay once they sell the products. María Olga learned about Caja Bienestar at exactly the right time, and the rotating credit line they provide has helped her out of a hole. “Now, I can tell Bienestar when I need capital to make purchases. I can help others in the community that need credit.”
She notes that the Bienestar team goes above and beyond to help her. Her shop is located far from an Oxxo, a popular convenience store chain where other customers deposit their credit repayments. Instead of forcing her to make the onerous trip, her Bienestar agent Mauricio comes to her shop to pick up her payments, so she doesn’t have to close her shop and lose sales. “I don’t feel a lot of pressure with Bienestar. I can schedule my repayment date when I have the money. They understand the ins and outs of running a small business.”
María Olga is relieved to have found a trusted partner that can help her maintain her financial health and that of her business, saying, “These days, there isn’t anyone to trust or who trusts you. I thank God that Bienestar came along and that they had confidence in me.”
Watch Maria’s story here: