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Why Banks Will Not Loan to Nonprofits

You could spend all day asking why banks will not loan to nonprofits. Nevertheless, a better question would be how you can get a nonprofit loan anyway.You could spend all day asking why banks will not loan to nonprofits.

In the nonprofit world, asking the right questions can make all the difference. You need to know why banks will not loan to nonprofits, how funding cuts may affect your mission and what do you need to be a more effective leader. The answers will determine your success or failure.

Is There Anyone Who Will Provide a Loan to Nonprofits?

When considering a not for profit business loan, it’s natural to think of banks first. However, banks use the same criteria to approve a loan for nonprofits as they do with a for-profit loan.

You could also seek a nonprofit business loan from a board member. If you choose this route, you should know about all the IRS restrictions and the messy relationships that can result.

What Other Options Exist Instead of a Loan to Nonprofits

Financing Solutions (www.financingsolutionsnow.com) is the leading company in the US that provides lines of credit to non profits. Many non profits ask them why they are willing to offer financing when banks will not. The answer is rather simple and it is the same for both non profits and commercial businesses. Banks want collateral to back up their investment and if you do not have a board member who is willing to put their home up then a bank will not work with you.

Financing Solutions does not require collateral so as long as your board is willing to give approval. Then, you can have a nonprofit line of credit from that can help you bridge the gap between when you get funding and when you have to pay important expenses like payroll.

It is important to note that if you have been delaying paying your employees, you are breaking the law. As a result, the IRS can access damages against your organization.

Important Whys for Every Nonprofit

Why everyone at your nonprofit must be able to speak on your behalf.

You never know where your next donor or big funding opportunity will come from. Therefore, it’s vital for everyone – staff, board members and leaders – to be able to quickly describe your organization and why funding is essential. This could include talking to potential donors at a dinner party, a fundraising program, or in an elevator. While some not for profits are easier to explain than others, all key stakeholders should be given a few talking points to share.

Why you need to surround yourself with the right people.

One bad apple can indeed spoil the whole barrel. A board member who does not live up to his duties, an employee not pulling her weight or an ineffective manager can derail an entire organization. Train board members, hire carefully and pay attention to turnover rates to avoid costly mistakes.

Why you should have a nonprofit line of credit, just in case.

You never know when or why the unexpected will occur. With 501c3 funding from Financing Solutions, you will always be prepared.

If your nonprofit would like a line of credit that you can use when cash flow is down please visit www.fscreditline.com/np to learn more, to apply and to receive a written offer.  A Line of Credit for your nonprofit costs zero to set up and zero until you use it, making it an excellent backup plan.

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