Where to Get Business Loans for Nonprofit Organizations
Article Summary: Many people think there is no need for business loans for nonprofit organizations. On the contrary, nonprofits have revenue, payroll, and expenses just like for-profit businesses. However, commercial banks are no longer your only source for this type of funding. It’s important to know where to go, what terms you can expect, and whether there are alternatives available to you.
Why a Line of Credit Is Better than Business Loans for Nonprofit Organizations
A nonprofit is like any other business. You have inflows of money (revenue) and outflows of money (expenses).
As a result, having the same tools that a for-profit business uses to address cash flow ups and downs are just as important. If you are looking for business loans for nonprofit organizations what you are really looking for is a line of credit.
When you think of business loans for nonprofit organizations, you are usually referring to a fixed amount of money that you must pay back over a set period of time, usually 2-5 years. A line of credit has the advantages of being a backup plan which is why it’s ideal for most nonprofits.
With a line of credit you are given a fixed amount of money that your nonprofit is preapproved for. You will have access to this money at any time and for whatever reason.
Who Offers a Line of Credit Instead of Business Loans for Nonprofit Organizations?
Commercial banks prove time and time again that they do not like giving lines of credit to nonprofit organizations. The main reason for this is that nonprofits don’t have collateral.
Financing Solutions is one of the leading providers of lines of credit for nonprofits. Their LOC product costs nothing to setup and nothing until you use it. This makes it perfect for short term business financing situations.
Most of the time, nonprofits use their line of credit from Financing Solutions (www.financingsolutionsnow.com) for payroll due to a delay in funding. This line of credit is easy to get in place, requiring only a 2-minute online application to receive a written offer letter.
After you receive the written offer letter, nothing happens until you indicate that you want to move forward. Then you will be asked for a few simple documents like a 990, and a bank statement.
How to Make the Best of Business Loans for Nonprofit Organizations and Other Types of Nonprofit Financing
1. Know your numbers. Carefully review your cash flow statement to determine exactly how much you will need and, more importantly, how you will repay your nonprofit business loan.
2. Don’t be afraid to get not for profit funding help. Some nonprofit boards and directors may frown on borrowing money. They worry about interest payments and the time it takes to apply. However, getting help is a lot better than ruining your reputation because you are not properly managing your funds.
3. Have a line of credit in place before you need it. If you wait until you are desperate, you will not make smart decisions about your nonprofit financing. Get a line in place now so you will be ready for all emergencies, surprises and growth opportunities.