Wal-Mart Family Bankrolls a Lender That Targets Hispanics

Wal-Mart Stores has long faced opposition from banks and labor unions to its attempts to break into the U.S. banking business. So the retailer’s founding family has come up with another way to get credit to its customers: Progress Financial. One of a growing number of financial institutions serving Hispanic customers who don’t have bank accounts, Progress Financial has morphed into a kissing cousin of Wal-Mart’s stores. The company is run by a former Wal-Mart executive. A Wal-Mart director sits on the lender’s board. And the founding Walton family’s venture capital firm is its largest shareholder. “We had always hoped there would be some relationship with retail,” says James Gutierrez, who founded Progress Financial in 2005 and was chief executive officer until last year. “Wal-Mart is the low-price leader, and that appeals to a certain demographic. There’s a lot of overlap.”

With Progress Financial, which lends under the brand Progreso Financiero, the family that controls Wal-Mart can put money into the hands of an important group of customers, if only indirectly, through a network of more than 80 branches. The branches make loans of as much as $3,500, and most are located a short drive from a Walmart. The Waltons’ venture capital firm, Madrone Capital Partners, “saw we could build a relationship with these customers,” says Gutierrez, now a partner at Insikt Ventures, a VC that has invested in lenders.