How Can a Nonprofit Get a 501C3 Loan
If you run a nonprofit business, you probably know how to get government grants, raise private funds and get reimbursements from governments. There are plenty of websites and organizations to help with that. It is far more difficult to know how a nonprofit can get a 501c3 loan or a quick nonprofit line of credit.
A nonprofit line of credit can help you make payroll, pay an unexpected expense or take advantage of opportunities. It is a great cash backup plan that is very inexpensive especially as compared to the problem it solves. Many nonprofits believe that a 501c3 loan is their best option from a commercial bank. However, it is important to know that there really are better, faster and cheaper alternatives.
Summary of Article:
- Nonprofits are eligible to get a loan just like a for-profit business
- What’s the difference between a loan and a line of credit
- Is a commercial bank the best place for a 501c3 loan
- Financing Solutions Nonprofit Line of Credit program details
What Does It Take for a Nonprofit to Get a 501C3 Loan from a Bank?
Some people think that nonprofits are not eligible for business loans, but this is incorrect. At the end of the day, nonprofits are still businesses and, as such, may need an instant business loan or line of credit.
A line of credit is a preapproved amount of money that sits there until you need it. A nonprofit might need a line of credit if they are waiting for a government check or a donation that has been delayed. That money is often used for payroll, rent or to continue a critical program.
A loan is a fixed amount of money that is taken all at once and paid back over a long period of time. It is typically used to expand the operation or mission of a nonprofit.
Banks are reluctant to grant a 501C3 Loan or line of credit because of strict criteria about collateral, personal guarantees, and credit scores. Plus the turnaround time from a bank is usually months, not days. There are some commercial banks willing to approve a 501c3 loan, but the banks typically work with large nonprofit businesses needing up to a million dollars in loans and are dealing with nonprofits with yearly revenue in the tens of millions of dollars.
Smaller nonprofits with yearly revenue of over $200,000 have been turning to Financing Solutions’ nonprofit line of credit program. The line costs nothing to set up, nothing when not being used and is inexpensive when needed. It is specifically designed for smaller nonprofits and their nonprofits love the flexibility it provides.
Unlike a commercial bank, Financing Solutions’ line of credit requires no collateral and no personal guarantees. The evaluation of approval is based on your past yearly level and current debt level.
What Are the Alternatives to a 501C3 Loan?
While waiting for money to come in, your nonprofit may still need short term cash to make payroll and handle daily operating expenses. This can severely limit the good work you are trying to do.
If you are thinking of delaying payroll, don’t. What most nonprofits don’t know is that it is actually illegal to not pay your people on time. Not only do your employees count on those checks but you could be fined for not making payroll on the payroll date. Your payroll company will also be upset with you because they are actually responsible for paying payroll taxes.
And if you are thinking of getting a loan from a board member or donor, there are strict IRS requirements and restrictions about accepting a loan from them.
Financing Solutions’ Line of Credit for Nonprofit Program
Since 2012 Financing Solutions has been the leading provider of nonprofit lines of credit to smaller nonprofits. FS has helped a lot of nonprofits in need with fast financing that can be in place in 48-72 hours.
Financing Solutions is A+ and 5 star rated by the BBB and have thousands of nonprofit clients throughout 48 states.
With Financing Solutions, you can get the cash now you need in a few days or the line of credit can be set up immediately so that if you need cash in the future, money is immediately available. It takes only minutes to apply and you will receive a decision within 24 hours. In fact, more than 90 percent of nonprofits are approved.
After you receive your offer letter you will be required to send in a few, easy to get documents. (most recent 990, 4 months of bank statements, a voided check, etc.)
Most importantly, there is no long term commitment. Your nonprofit can repay the line when you are ready and there is no charge when the line is not being used. It a great cash emergency plan. Lastly, the line of credit program is very easy to understand.
Good Advice for 501C3 Companies
Running a nonprofit is not easy. An ED is often so busy trying to keep the organization going that you just don’t have the time to be proactive. A line of credit is a cash back up plan that thousands of 501c3’s are getting in place.
Financing Solutions’ line of credit for nonprofits really is a no brainer. Even if you don’t need the funds now it is a good idea to get the line in place.