I always find it refreshing to get out of the office every once and a while to attend a training class, meet up with other economic development professionals and take a break from the routine of everyday. Last month I was fortunate enough to attend a training hosted by the Northeastern Economic Development Association (NEDA) on the topic of business credit analysis and real estate financing. While the topic may sound rather dull, the presenter from the National Development Council (NDC) did an excellent job and made it quite interesting.

In addition to the slide show presentation and information from the instructor, the open-discussion style format of the training allowed the participants to offer stories about what it has been like for them to manage loan programs in their communities and what challenges they have come up against when reviewing business credit.  It was interesting to hear the economic developers in the room talk about the struggles they face when trying to loan out public money in a conservative way (to ensure payback), while also using the money to act as the “gap-filler” for businesses who otherwise would not be able to get traditional financing. I can relate to their stories. In some of the loan programs I have administered it has been hard to find a balance between trying to support local economic development through loans to riskier businesses while at the same time protecting the public’s trust in the organization’s money management decisions.  We discussed at the training how one of the most important things that need to be done when establishing a loan program is to determine what the role is and how willing to take risks the stakeholders are. For example, is the loan program’s role to take risks on businesses that otherwise would never get a traditional loan, or is it to partner with traditional banks to expand access to capital?  One type of program is not better or more important than the other, but expectations of risk should be clearly established before any loans are made. 

The real estate development financing aspect of the training was also very interesting and NDC offered us the chance to take a case study and figure out how to make the financing work. We were able to make changes to the required interest rate and terms and required cash on cash returns of the investors to make the deal go through. It was helpful to see all the different players in the game and all the different ways people need to compromise in order to make the project work.  When all was said and done, the three groups at the training had all solved the problem in a completely different way while still making the project successful.

Finally, as someone who knows her way around Microsoft Excel’s formulas pretty well I had never taken the time to actually learn the background calculations and this class offered that information (all good information, but it is unlikely you will catch me doing the long hand work anytime soon).