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Grants are the traditional be the go-to source for funds. But they can be time-consuming to apply for and don’t always offer as much as you need. If your budget still has gaps, you might want to apply for a low-interest loan from a nonprofit-friendly lender.
Nonprofits don’t have a lot of options when it comes to loans. Since the goal isn’t to make money, lenders consider them to be high-risk businesses. In fact, it’s so standard for business lenders to require applicants to run a for-profit business that many don’t even mention it. There are, however, a handful of lenders that offer special programs for nonprofits.
First Republic Bank offers financing for nonprofits as a part of its business loans program. Known for its stellar customer service (they even bake their own cookies for clients), this bank offers your organization support throughout the whole process. You’ll get paired with a specialist who can help you with not only applying for a loan, but also banking services, managing your organization’s finances and 403(b) retirement plans.
First Republic offers the following types of loans to nonprofits:
Like your organization, its loans are low-cost and tax-exempt. Your organization must open a First Republic checking account to qualify for a nonprofit loan, however. Loan amounts, rates and terms vary depending on your nonprofit’s unique situation.
Read our review of First Republic business loans
Bridgeway Capital is a community development financial institution (CDFI), or a lender that specializes in providing funds to local businesses with the aim of building up underserved communities across the country. Bridgeway Capital’s focus is on entrepreneurs, though it also has a nonprofit loans program.
Here, your organization can apply for financing that includes:
The loans come with fixed rates and no prepayment penalties. Like with First Republic Bank, loan amounts, rates and terms vary based on your nonprofit’s specific circumstances.
Propel is an organization that provides financing for nonprofits in Minnesota, Wisconsin, Iowa, North Dakota and South Dakota. It offers several different types of loans:
Loan terms can be as short as a few months and as long as 15 years. Rates vary depending on the nature of your nonprofit, though they start at around 6.5% APR. Term loans come with an origination fee of $500. Lines of credit come with a fee of 1% of the loan amount.
To be eligible, you must be a 501(c)(3) that’s located in one of the five states where it operates. Loans aren’t available to startup nonprofits, so you’ll likely need to be around for at least six months.
What you need to apply for nonprofit financing varies by lender. You might be asked to supply some or all of the following documents when your nonprofit applies for a loan:
The main problem nonprofits face is finding a lender willing to work with them. That’s because lenders tend to consider them high-risk borrowers — there often isn’t a steady stream of funds coming in. Since nonprofits have a different financial model than for-profit businesses, you might want to work with a lender that has a specific program for nonprofit financing.
One other problem is that it’s not always easy to get funding fast. Those online lenders with five-minute applications and next-day funding typically are only available to for-profit businesses. If you anticipate needing funds fast in the future or want to cover your bases in the event of an emergency, consider taking out a line of credit.
Grants are a more common source of financing than loans for nonprofits. You don’t need to pay these back, but it can take a lot of time and effort. They also aren’t typically as large as business loans, often no more than a few thousand dollars. If you’re thinking about relying primarily on grants, consider hiring a professional to take care of your application. They’ll have some expertise on what works and what doesn’t and could get your nonprofit more funding in the end.
Don’t have the funds to bring on new staff? You might want to start your search for grants here:
How grants for small businesses work
Getting a loan as a nonprofit takes some research, but it isn't impossible. Sticking with a lender that specializes in nonprofit financing might be your best bet — it can be difficult to find a lender willing to work with you otherwise. Read up on how business loans work to make the right choice for your nonprofit.
All lenders are now accepting First Draw and Second Draw loans until March 31st. Here are tips for how to pick a PPP lender.
The PPP wasn’t made with sole proprietors and independent contractors in mind. Here are other options that can help.
A lender who primarily offers loans to underserved small business owners.
Some PPP borrowers can get another round of funding through community lenders — though not all can qualify.
Ascent guides women entrepreneurs through key steps to starting a business. But its disaster assistance is too little, too late.
Shopify merchants may be able to get funding without a credit check.
You only have until the end of March to get your next application in.
First Draw loans are now available through nonprofit lenders, with Second Draw loans following shortly behind.
Grants of up to $10 million for businesses that rely on ticket sales.
You might be able to apply for more funding on your PPP loan, get a second PPP loan or take advantage of a new grant program.
Do nonprofit organisation in Zambia have access to this loan to run a microcredit structure (village banking) with women clubs/groups?
Hi Joseph,
Thanks for getting in touch with Finder. I hope all is well with you. 😃
Upon checking, the lenders mentioned above only serve organizations based in the United States. If the nonprofit organization you are referring to is based in the United States, but have programs in Zambia, they could be qualified for the loans listed above. If not, then you would need to check Zambia’s local government and organizations who might be able to help.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
WHich fund do you post a loan for repair expenses?
Hi Donna,
Thank you leaving a question.
Propel is an organization that provides financing for nonprofits in Minnesota, Wisconsin, Iowa, North Dakota and South Dakota. It offers
Short-term facility project loans to help your nonprofit renovate, repair or buy equipment. Loans typically range from $50,000 to $1 million. Hope this helps!
Regards,
Val