Financing Essential Services and Social Mobility
For millions of women, the COVID-19 pandemic has delivered a rare and ruinous one-two-three punch. First, parts of the economy that were smacked hardest and earliest by job losses were ones where women dominate – restaurants, retail businesses and healthcare. Then a second wave began taking out local and state jobs, another area where women outnumber men. The third blow has, for many, been the knockout: the closing of childcare centers and the shift to remote schooling. That has saddled working mothers, much more than fathers, with overwhelming household responsibilities.1
In Colombia, most schools have been closed since March of last year with widespread deterioration in income. GDP fell -6.8% in 2020. On a per capita basis it decreased from $535 to $449 per month. Fortunately, with support from AGC’s financing partner, one of their clients, Fundación La Santisima Trinidad, was able to continue its important work addressing societal challenges.
Established in 2010, Fundación La Santisima Trinidad (FST) is helping to lighten the caregiving burden for families in Colombia. The organization provides early childhood care for 800 kids, career training for their mothers and support for 50 seniors, as well as helping 30 at-risk youth. Despite a good relationship with the government and strong demand from the local community, 2020’s economic downturn brought added struggles to their ability to deliver essential services. For much of the year, FST could only offer modified programming to comply with local health directives, but they continued to do their best to serve the community.
Divina, a board and finance team member, explains, “During the pandemic, we had to reduce our services to a minimum, but we were able to retain everyone on our team and didn’t have to let anyone go. The government is a great customer, but lately they have been paying later than usual, which has put even more pressure on our finances.”
She continues, “The pandemic has had an extremely negative effect on many of the families we serve. Many don’t own a phone and can’t receive messages about schooling or healthcare access. Oftentimes they have to set up a call through another family member or neighbor to be able to access vital information regarding their children’s virtual education, or even their family’s livelihood. It’s been an incredible challenge.”
Our foundation employs 169 people (over 80% of whom are women).
– Divina, board and finance team member
FST works with AGC’s local financing partner, a female-led, tech-driven factoring company led by Alexandra — founder and CEO. Dedicated to delivering working capital to small businesses and making lasting contributions to society, Alexandra’s company has delivered positive financial returns and social impact. Alexandra explains, “With the collapse of in-person education and social support services, working capital was needed more than ever before. Fundación La Santisima Trinidad was one of our first clients. We do everything we can to find a way so that teachers are paid on time.” FST has an annual contract with the government and an excellent record of providing high-quality care, but the process of getting paid can be slow. Divina knows that she has a friend who understands her business which gives her confidence. “I know she is grateful to have a financing partner who really cares about her and her organization.”
The strong partnership extends through to AGC. “We think about our relationship with AGC like Divina thinks about us,” Alexandra explains. “They are inside our business. We share many values, such as financial inclusion. We want to generate revenue, but also create a positive impact. Starting a company has been my biggest challenge in life. It’s really nice, but hard. When we were just starting out, the first hurdle we faced was financing. As a start-up, we had no financing options available to us. AGC believed in us from the beginning and backed us with a small line of credit, and we’ve been steadily growing exposure since our inception in 2018.”
Thanks to her early investment in technology, Alexandra’s company was positioned for success in 2020. “We were ready for the anticipated shift to e-invoicing and digitization when the pandemic hit. Our digital platform makes it easy for investors, invoice issuers (small businesses) and payers to interact efficiently and securely. During the pandemic, we also doubled down on our internal work and focused on improving our corporate governance, upgrading our platform and obtaining additional security certifications to better protect sensitive client information.” Her digitization efforts have already paid off. Alexandra explains, “In 2020, we focused on the businesses in the economy that were still working and were able to increase revenue by 200% and triple our client base (from 50 to 150).”
“These successes enable me to continue serving dynamic entrepreneurs struggling to access working capital – on terms that work for them and in ways that better our society as a whole.” Divina agrees, stating, “Our foundation employs 169 people (over 80% of whom are women). We were relieved to know we were able to keep our staff during this difficult time thanks to our ability to access working capital.”
Alexandra is committed to creating more opportunities for women both within her company and in the wider community. The three recent additions to the team were all women and have been extremely valuable. “In this phase of my company, my team’s organizational skills and flexibility have been critical to my success. I could not have met my goals without them.” She continues, “The tech area is always crowded with men.” In an effort to create a stronger pipeline of female candidates for the future, she plans to work with a tech bootcamp that provides programming skills and placement support for low-income population. According to business manager Pedro, “The program helps create social mobility.”
Ultimately, Alexandra’s factoring support has not only provided Divina’s organization with flexible financial terms, but also hope. Divina states, “I’m very optimistic for the future. I feel hopeful about the next six to 12 months. We’re anticipating the government asking us to increase our services moving forward. We know we provide good, essential services that are hugely impacting our community. Thanks to support from AGC’s partner, we’re able to further support the lives of those who need it most.”
1 New York Times online article from April 24, 2021. https://www.nytimes.com/2020/11/17/business/economy/women-jobs-economy-recession.html?referringSource=articleShare
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