Meet the influential Loan Manager of LA-based CDFI, Pacific Asian Consortium in Employment.
Grace: I always like this question to get us started; what is one of your favorite things about living in LA?
Babita: I can’t thank my husband enough for choosing to move to LA. I'm an ocean lover, so I’ll go to the beach anytime. I love to hike - I used to do it back in India, and here where I live there are many hikes not far away. Also, the LA weather is just perfect.
Tell me a little bit about your background. How did you end up at PACE?
Babita: PACE is my first job here in the US because I just completed a little over three years here. When I was in India, I had done my CPA and I had a long history of working with non-banking financial institutions as well as banks. I had this taste of the corporate world, as well as the front end work of business development. What I wanted to continue doing in the US was the underwriting things. As you know, Plan A never works so you have to jump to Plan B. Plan A was to complete my CPA over here, but I was totally fed up just staying home. After working for this many years, you just can't take your mind off not working.
So I started looking for an underwriting job and happened to come across an opportunity. I knew I wanted to continue doing underwriting, because it's very interesting for me to know how they build their business and how they expand it. That's very fascinating for me. Through PACE, after the first interview, something clicked like, okay, this is different from the entire corporate world. I also wanted personal and professional life balance. It was a nonprofit but I gave it a shot to learn more. Everyone speaks very highly about our CEO and the way he started the organization. I’ve learned after joining that it has a long history, and the services which it offers and the team are excellent. That's what kept me going.
Are there any aspects of the job that you feel are strikingly different between doing it in the US versus doing it in India?
Babita: The cultural difference. With nonprofits here, it's all the more different because while you have goals, it's not as mentally not draining for you. Culture wise, I think everything is so cool! The relationship between the peers and the supervisors is very healthy. In India we don't have that. The supervisors take the liberty of saying “Okay, you have to get this done no matter what.” Here you get your personal space, no one interferes in your boundaries. That's what I admire, especially after working for six, seven years in India.
Why do you continue to do this work? Are there particular passion points that you enjoy about helping small businesses?
Babita: The major difference is when you’re working as an underwriter in banks, what you're actually doing is just contributing a drop in the ocean because it’s often not small business owners. What we're doing here is with mom-and-pop shops. At that level even with a $500 check, you see the happiness. I make it a point that when a disbursement check is been issued, I'm present, and it's absolutely a different experience altogether. It keeps us motivated to introduce more innovative products in what we do, because we understand that we are the last source of hope for these small businesses as a CDFI.
We are also providing technical assistance, so it's not that the relationship ends there. You are growing with that business. You feel that joy, when the client is saying “I'm looking for a new location” or they come back to us for a second loan. The success stories which we read, those are our real stories.
What are some elements that make PACE unique?
Babita: The suite of services which we provide in housing, education… everything a small business owner needs support in. I can't think of any other CDFI or community development corporation who can offer this many services. It started with a small thing, but now where we have reached after 45 years makes us very special. Someone comes to us just for a loan, but we know that we can help offer more. We’ll go ahead and refer them to our education department or our workforce department. Some even have kids who can later enroll with us.
In the team that you work with day-to-day, are there elements that make that group of people unique?
Babita: Frankly, I've never seen a staff as ethnically diverse like the one which we have right now. We are an Asian community, but coincidentally, we also have staff members who speak so many different languages. Language is never a barrier to serve any client.
What is something that your team does really well?
Babita: They're able to connect with the clients. The technical services really help the client. It's not only just one to one consulting, we also offer workshops and webinars. It's not necessary that a client has to come to us for a loan - We are educating the client right from starting a business from scratch. That is something clients admire about our team. In the end, the number of hours we are spending are not always leading us to a particular loan lead, but we can help these clients in some way or the other.
A theme that I've heard from other CDFIs is that the main goal is not necessarily to get funding all the time.
Babita: Yes. Within our business development team, we have two separate teams as loan counselors and business counselors. When we do webinars and workshops, if a loan officer comes across a client who's not ready for a loan, they’re automatically referred to a business counselor who works closely with them to understand the nitty gritty’s of starting a business. Business counselors work with them one on one through getting your license, your permits, getting your business incorporated, getting your NAICS code, reading the lease agreements, etc.
What's something that your team has learned (or you personally) that you would want to pass on to someone else in a similar position as yours?
Babita: As a CDFI we are the last resource for clients. We have modified our products in a way which works for these small business owners so that we can give them a loan or some kind of financial help.
I think that COVID thing has actually changed everything. We have seen this major downside for all these small businesses. The supply chain, the rate of interest, the fees… We never charged any upfront fees for applying for any loan with us. Other CDFIs have started doing that as well, and I think not charging for assistance will help everyone in the long run.
Thinking back throughout the pandemic, were there any assumptions that you and the team had about how it was going to affect your clients?
Babita: We saw altogether different things in 2020 and 2021. For the most part of 2020 we were only working with our clients for deferment requests. For at least six months, most really couldn’t think of making a payment. The entire team was collecting documents and doing strategic underwriting, keeping in mind how we could restructure or modify this particular loan for the client. That's the entire 2020.
Our goal was by 2021 to reach a state where we could do PPP. We knew that when we started doing PPP, it was going to be so many clients. The number of hours which we spent helping these PPP clients, although we are working from home, was unbelievable. We never thought that we would do this much. We worked with like 200 clients each and about 5 million dollars in PPP loans total. The average PPP loan size is ten to fifteen thousand dollars. On top of that, these clients are often not tech savvy. You are at home, trying to help a client over Zoom to fill out a PPP application. It was hard.
Until June 2021, it was just PPP and the rest of 2021 was EIDL. The EIDL was closing in December, so there was another big push to help the clients.
Gradually, we’ve seen some businesses that were able to survive and are thinking now about expansion.
In this new year, what trends are you seeing from your businesses? Are things starting to look up in general?
Babita: At this point 2022 already looks good. The pipeline which we are seeing and the applications that we are receiving, at least people are understanding that there's no more forgiven loans. In 2021, they had this perception that every loan applied for either should be free of cost or would be forgiven. Slowly clients are understanding that we have to continue and come back to the normal rate.
Is there anything in particular on the roadmap for the year that you're looking forward to?
Babita: In 2021 we were declared as an MBDA, which is a minority business development agency. We are among three in California, so that's huge to be given that recognition. The plan is big - it's a five year program, which we have been awarded. We are hiring more staff; we are having a separate team for procurement services, which will provide these contractors and small business owners government contracts. When we introduced that product to the client, they were very eager. We are able to have more events to make it visible to everyone that we are an MBDA, so that presence would be felt. We are really very, very excited about 2022 for procurement and this MBDA thing. The standards are high. The team will increase. I think by end of 2022, we will be altogether a different PACE team.
The last two years, and coincidentally with the timing of when I joined PACE, I knew it was going to be on-the-job training, but I couldn’t imagine the extent. I learned a different side of lending. There was a motivation in the number of clients we were serving. No amount of reading or podcasts could have helped me learn that. I value that. Those years solidified the value of supporting the community as a CDFI.
Yeah, I think everyone who worked through the pandemic should receive an honorary degree in emergency response management.
Babita: You know, I had a few other friends and family that were sharing that at least 2020 was very easy because they were working from home and gained some free time... things slowed down. But it was the opposite for us. It was COVID plus so much work, and very different work at that.
We should be thankful for the number of bills which have been passed. We as a CDFI know that we are going to get a lot of funding - billions coming out. The opportunity is huge over the next few years, and we are in safe hands. Lending is going to be altogether different.