Student Perspective: Four Lessons from My Community Development Finance Internship

Leigh Ann Eisenhauer, pictured here with an Enterprise Center Capital Corporation client, is a rising Penn junior.

Undergraduate Leigh Ann Eisenhauer reflects on her summer experience at The Enterprise Center Capital Corporation (TEC-CC), a Philadelphia based Community Development Financial Institution that provides access to capital to small businesses, with a focus on women and minority owned businesses. She received funding from WSII to support this experience. 

This summer, I had the opportunity to work firsthand with an innovative consulting firm in the deregulated energy industry, a dessert company that has a contract with Whole Foods, and a tech startup that started the biggest fight in Shark Tank history, whose founder was featured in Forbes 30 under 30.

I did not work with these incredible businesses through a typical investment bank.

In fact, each of these women and minority owned small businesses were unable to secure funding through traditional lending sources. Fortunately, Community Development Financial Institutions such as The Enterprise Center Capital Corporation (TEC-CC) make it their mission to provide access to capital to businesses without the collateral or credit history to obtain adequate funding. These businesses go on to positively impact their communities by creating jobs and stimulating the economy in low income areas.

My work at TEC-CC was incredibly humbling and informative. While working with underfunded small business owners, I learned four important lessons about social impact investing.

One of the greatest challenges faced by small businesses, particularly women and minority owned businesses, is inadequate access to capital.

TEC-CC’s West Philadelphia offices place it in the heart of a federally designated Promise Zone, an initiative created by The Obama Administration to address the challenges of areas trapped in the cycle of deep poverty. During my time at TEC-CC, I learned that despite the economic hardship in this region, there is no dearth of entrepreneurial spirit and innovative ideas. Small businesses in this area rarely have the opportunity to come to fruition, not due to lack of ideas or hard work, but due to lack of funding. Entrepreneurs with poor credit history or lack of collateral are frequently denied traditional funding, thus inhibiting or severely limiting the development of businesses that would otherwise be successful.

TEC-CC takes risks that traditional banks would not, offering lower interest rates to entrepreneurs that would traditionally be deemed unbankable. TEC then works closely with these businesses to provide technical assistance and connect entrepreneurs with opportunities that will help grow their businesses. The result is the development of small businesses that create jobs and stimulate the economy in areas affected by economic hardship.

When it comes to social impact investing, you invest in people, not just businesses.

Impact investing, unlike traditional investments, does not measure its success solely based on IRR and default rates. The ultimate mission of TEC-CC is not to turn a profit, but to assist entrepreneurs in growing successful businesses that create jobs and stimulate the economy. For example, in 2014 TEC-CC provided a loan to a client that was unable to receive bank financing due to their credit history. However, the entrepreneur was savvy and passionate, and their business plan, if successful, would lead to significant job creation. By 2016, the business was current on its payments and had grown so much that TEC-CC made a $200,000 equity investment. In those two years, the business had grown from 3-5 employees to over 60 employees. By taking the risk in investing in a promising entrepreneur, despite the business’s financial history, TEC-CC was able to make an investment that was not only financially lucrative, but also yielded far-reaching economic and social gains.

Technical assistance is invaluable for small businesses, particularly those owned by women and minorities and/or in low income areas.

TEC-CC operates under the umbrella of The Enterprise Center, which has branches that provide technical assistance and connect entrepreneurs with opportunities. Many entrepreneurs that come to TEC are smart, savvy, and hardworking, but face difficulties operating their businesses due to a lack of financial and entrepreneurial acumen. For example, one TEC client owned a transportation company that was not established as an LLC. Had one of their clients been injured and sued, the owner could have not only lost the business but also their personal wealth. For entrepreneurs without a strong business background, technical assistance can be the difference between success and failure.

As for my final lesson, I learned that it is incredibly rewarding to make an investment that doesn’t just turn a profit, but also impacts your community. For this reason, I look forward to continuing my involvement with the Wharton Social Impact Initiative.

Leigh Ann Eisenhauer is a rising Junior studying Economics in the College and pursuing a minor in Statistics through the Wharton school. She works as a Teacher’s Assistant for Introductory Microeconomics in the college. She is passionate about working towards greater income equality in the United States.