What are examples of borrowing needs?
As an example, if a nonprofit has a contract with a government agency to provide program services, but the contract is on a reimbursement basis, we will loan the funds to get the program started, and the organization will repay it from the cost reimbursements under the contract. Or, say a nonprofit organization has been approved for a grant from a foundation but will not receive the money for a couple of months - we will lend funds now and the loan will be repaid from the proceeds of the grant. We also provide short term funding for emergency situations, such as if the air conditioner breaks and the board has agreed to raise the money for a new one but the new equipment is needed right away.
<
back to top
What are the qualifications for borrowing agencies?
To qualify for a loan, an organization must:
- Be a 501(c)(3) organization, incorporated and operating in the state of Texas;
- Have a Board of Directors with at least five unrelated members, and be empowered to borrow;
- Be able to submit monthly financial statements and cash flow projections;
- An applicant must be creditworthy, able to secure the loan and have a defined source of repayment for the loan.
<
back to top
What does it mean to be “creditworthy and able to secure a loan?”
Qualifying agencies must be financially stable with a defined source of repayment for the loan.
<
back to top
What are the terms and conditions of the loan?
Terms & Conditions for the Nonprofit Loan Fund:
- Amount: Up to $60,000, not to exceed 10% of the borrower’s current annual operating budget.
- Interest Rate: Determined at the time of loan approval, but generally between the prime rate and prime plus two percent (2%).
- Maturity: One year or less. Repayment schedule is flexible, based on the borrower’s projected cash flow. Borrower must be able to demonstrate a defined source of repayment for the loan.
- Collateral: Generally a first lien on cash and investments, contracts and accounts receivable and present and future contributions. Based on the Center’s analysis of the credit, the loan approval may require other or additional support.
- Loan Administration Fee: Ranges from $150 - $1,400, payable only if the loan is approved. The amount of the fee is based on the size of the borrower’s operating budget, whether the borrower is a member of the Center and whether the loan request is on an emergency basis or not.
<
back to top
Who reviews my application?
Applications are reviewed by a committee of financial professionals. The committee process for loan review is practical and professional. It seeks solutions acceptable to each client on a case-by-case basis. All applications and committee meetings are private and all information will remain confidential.
<
back to top
How long does the approval process take?
The approval process varies for each client; however, a typical application must go through a variety of steps including initial review by Center staff and review by the Loan Fund committee. Typical approval of applications takes 20 business days from the receipt of a complete loan application package; however, an expedited review may be requested, with review within five business days of receipt of the completed loan application package, for an additional fee of $200. Once approved, the Center will develop a payback plan most appropriate for the client and a formal agreement will be signed.
<
back to top
What is the typical profile of loan fund clients?
Nonprofits that have received loans represent social welfare, health, civic, education, cultural arts and environmental groups. Many are small, struggling, community-based organizations that cannot qualify for a bank loan; however, loans may be provided to nonprofits of all sizes and service areas. Some of our steady clients are larger agencies with seasonal working capital requirements. Typically, over 100 agencies contact the Loan Fund each year. Of those applying, 15-20 will receive loans totaling nearly $500,000.
<
back to top
What are Loan Fund clients saying?
“This past year we were the recipient of a loan from (the) loan program and it literally saved our organization. Not only did they provide critical funding to our group, but they helped us to become self-sufficient which, as you know, is much more valuable.”
-- Board President, Nonprofit Child Care Facility and Pre-School.
“There are many instances where nonprofits, with their special financial situations, would not be able to get funds from conventional sources. It’s a very valuable service and the staff are easy to work with…put me down as a ‘thumbs up’ endorsement.”
-- Executive Director, Performing Arts Organization.
“We contacted the Center and found the staff to be knowledgeable, understanding and most importantly, responsive.”
-- Executive Director, Social Services/Youth Development Agency.
<
back to top
Would I qualify for a loan?
First, review the qualifications
required of loan fund clients. Next, you can take the Pre-Qualification
Scan, a free test asking the initial questions to see if you might
qualify for a loan. After submitting the Pre-Qualification Scan, Center
staff will follow-up to let you know if you might be a good fit for
the Nonprofit Loan Fund.
<
back to top
How do I apply for a loan?
Agencies must submit a formal application for review by the Nonprofit Loan Fund Committee.
Applications may be requested from Ryan
Smith at
smith@cnmdallas.org or 214/826-3470,
ext. 236.
<
back to top
Is there a fee to apply for a loan?
The application fee ranges from $150 - $1,400, payable only if the loan is approved. The amount of the fee is based on the size of the borrower’s operating budget, whether the borrower is a member of the Center and whether the loan request is on an emergency basis or not.
Before
submitting a formal application, agencies may first take the Pre-Qualification
Scan free of charge to see if they might qualify for a loan.
<
back to top
