Intern Confidential: Adam, Lending intern
August 30, 2011 § Leave a comment
We’ve been lucky this summer to have several fresh faces around the office as interns, rolling up their sleeves to learn what it takes to keep a community development organization like ours afloat. Here are their thoughts:
As a finance major, I came to ECDI hoping to learn about credit analysis, portfolio analysis, cash flows, and the use of financial ratios in ECDI’s lending department. Although I was able to learn about all of these things and more during my time here, what I learned about most was the importance of economic development in the lives of everyday Ohioans. Not only did ECDI’s activities help bring about measurable change in the lives of our clients, especially for our lending clients, but ECDI also worked very hard to support those individuals with technical assistance to ensure they would be successful even after their relationship with ECDI had ended. At ECDI this is common practice, but at many banks and mortgage lenders across the country, especially during the last few years, engaging in activities which knowingly harm their clients even before their business relationship is terminated was commonplace and eventually disastrous. While most banks in America do a good job of serving large businesses and medium to high wealth individuals, the riskiness and unprofitability of serving start ups and lower income individuals had made these clients targets for predatory lending long before the Great Recession completely ostracized them from traditional financing sources.
By understanding the niche of clients that ECDI serves and the lack of alternatives that many of these clients have, it is very easy to imagine what the lives of some of our clients would be like if ECDI had not been there to help them start their own business, save for their first house, or engage in any number of services we provide our clients. With our state government having already decided that cutting social services, assistance to local governments, and even parts of the Ohio Department of Development are necessary sacrifices to relieve the arduous burden of estate taxes and certain capital gains taxes, much of the future economic assistance will be left up to organizations like ECDI to fill the gap. Stepping up to that challenge is something ECDI has been able to do time and again as it has expanded its services to help out certain government programs whose funding frequently dries up (home repair) and to help quickly expanding sectors of Columbus’ economy which need specialized assistance (Food Fort).
The successful expansion of ECDI was built on the success this organization has experienced in its core activities of lending and IDAs. As a lending department intern, I was able to understand that success and how we help our clients obtain it by viewing our client portfolio on a macro and micro level. One of the first activities I was involved in was portfolio sector analysis, which involved understanding the performance of a particular loan sector, identifying its reasons for success or difficulty, and determining which types of technical assistance ECDI could provide these clients to help them become even more successful. Many of the issues raised in the analysis were concerning the future difficulties a sector could face due to changing macroeconomic factors or legislative changes. An example is our daycare sector which will experience increasing costs and, for some, decreasing revenue due to cuts and new regulations implemented in the recent Ohio budget. The analysis identified metrics we should use to gauge a particular daycare’s exposure to these effects and what technical assistance ECDI can provide to help those affected offset the negative changes. In the final part of my internship I underwrote a loan which included a credit analysis, cash flow analysis, and a presentation to the loan committee. In addition to the valuable financial experience this provided me, it was also the perfect opportunity for me to see how a small business that was poised to succeed and make a difference in the lives of its owner, employees, and clients, could rely on ECDI for the additional help it needed. ECDI changes peoples’ lives one loan at a time, and if our economy and governments could also be a force for that change, we could show everyday Ohioans that economic development is not a privilege for the elite, but an opportunity for all who work to pursue it.