Best Business Loans for Nonprofits
Nonprofit businesses face unique challenges in raising capital for their causes. Raising awareness is a big factor in the amount of money that a nonprofit organization is able to obtain. Nonprofits are highly competitive as they are all fighting for the charitable contributions that your average individual or family has available in their household income. The demands of running a successful Nonprofit include the facility and location maintenance, equipment to meets the needs of the cause, proper advertising for the charity, public outreach, and skilled labor force to acquire and continued education and training.
AdvancePoint Capital has the experience and history with funding Nonprofits like yours to provide working capital to meet the needs of your nonprofit business.
The 5 Best Business Loan Options for Nonprofits:
Term Business Loans for Nonprofits
A Term Business Loan is a loan typically acquired at a bank or credit union that has a fixed amount that you are approved for with a fixed term of 3 to 10 years, with a principal and interest rate, and a monthly payment. These business loans offer the lowest rates and terms but are extremely difficult to achieve. They have high credit standards, more financial paperwork to provide, minimum gross revenue, and profit requirements that most small businesses do not have and minimum time in business, typically three years.
Highlights of Term Business Loans:
- Low-interest rates and fee starting at 7%
- Terms from 3 to 10 years in duration
- Monthly affordable payments
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Term Business Loans
Short Term Business Loans for Nonprofits
A Short Term Business Loan is very accessible to many small businesses as it has lower annual revenue requirements and typically does not provide business funding based on profit & loss and relies more on credit and cash flow health in the business bank statements. Short term business loans feature a fixed amount funded with a fixed amount that you’re responsible for paying back over a fixed term of time, with typically a fixed monthly, weekly, or daily payment via ACH.
Highlights of Short Term Business Loans:
- Business funding in as little as 1 day
- Excellent to Poor credit accepted
- Only an application and 3 months bank statements required for approval
- Easier approval qualifications than most other business loan products
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Short Term Business Loans
Business Line of Credit for Nonprofits
Business lines of credit offer the most flexibility in that they operate as a credit card and enable you to access money at any time as long as you have not reached your credit limit. Business owners also have the ability to apply for an increase with additional information provided and approved. You receive a credit limit once approved and can draw as little as you want, as often as you want, as long as you don’t exceed your limit. They are typically six months to a year in duration but can be revolving and have principal and interest rates that can be quite attractive.
Highlights of Business Line of Credit:
- Attractive interest rates starting at 7%
- Revolving credit
- Affordable monthly payments
- Ability to take as little as you want and draw on it as often as you like
- Only responsible for the interest on the current balance
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Business Line of Credit
Business Cash Advance for Nonprofits
Business Cash Advance (also known as Future Receivables Purchase and Sale Agreements). Provide an upfront lump sum of money to businesses in exchange for a fixed percentage of the businesses’ future sales. Repayment is typically made daily or weekly. Either an ACH payment auto deducted from a business’s bank account or the percentage is taken out of future credit card sales until the payback obligation is met. Terms are expressed as a future sale, so you are given a fixed amount and then responsible for paying back a greater amount through a fixed percentage of future sales. The difference between the amount given and the amount paid back to complete agreement is your flat cost of money. The estimated time to repay is typically 6 to 18 months, but there are no term limits as the repayment is based on future sales.
Highlights of Business Cash Advance:
- Flexible repayment terms based on a set percentage of future revenue
- Higher approval rates than banks
- Lower credit standards than traditional banks
- Less paperwork
- Fast process 1 to 2 days to fund
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Business Cash Advance
Business Credit Cards for Nonprofits
Business Credit Cards are credit cards that have business guarantees and are revolving lines of credit that can be used for purchases of any sort using a card or account number. When used, the business owner pays accrued interest on the balance with low minimum monthly payments and no set term for repayment. Very flexible forms of credit that can help build both personal and business credit.
Highlights of Business Credit Cards:
- Revolving credit with Principal and Interest charged.
- Helps business both personal and business credit
- Ease of use and requires little to no contact with a creditor with online access to all account needs.
- Flexible Monthly payments
Benefits of Nonprofit Business Loans
Cash Flow
Running a Nonprofit can have a unique set of cash flow issues. Contributions can fluctuate depending on the time of year, which can affect the ability of the nonprofit to make payroll and support the programs related to the services provided to the mission. To have the proper reserves to handle anything that may come up in running a nonprofit, having a credit facility is vital.
Owning Your Own Equipment
I think it can be easily said that the mechanics and workers working on automobiles are the lifeblood of an Auto Repair Business. Hiring the right people and maintaining continuing education is a must and can be costly, especially if you’re trying to maintain high standards of qualification and certification. Sometimes signing bonuses are needed to acquire the talent and maintain a high standard of knowledge and education. Business financing may be needed to fill the gaps and keep cash flows strong.
Hire Employees, Payroll and Managing a Growing Team
The people who work within the Nonprofit are its lifeblood. Hiring the right people and maintaining continuing education is a must and can be costly, especially if you’re trying to maintain high standards of qualification and certification. Business cash flow can be strained and may be needed to fill the gaps and keep cash flows strong.
Supplies
You may be the type of Nonprofit that needs to maintain a certain amount of supplies to provide to people in need, such as school supplies for children, vaccines, medical supplies, food for food pantries, and soup kitchens.
Advertising
Advertising, now more than ever, is a part of being a successful nonprofit. The success and growth of a Nonprofit require attention to the internet. There are many options out there for people to donate money to a worthy cause, and more and more are turning to the internet instead of word of mouth. Cost to build a website and the search engine optimization needed month over month will cost thousands of dollars but will be well worth it. Financing that cost may be necessary if you don’t have the upfront money. Costs to have a proper Website built and optimized for search engine optimization can reach above $10,000, let alone the monthly optimization work, which takes time, effort, and money paid to web developers who specialize in search engine optimization.
Types of Nonprofit Organizations We Serve:
Care Source
Non-Profit Medicaid managed care plan
Boys Town
Non- Profit to help children in bad environments
Head Start
Non-Profit that promotes the school readiness of preschool children
Boys & Girls Club
Educational Testing Service
Non-Profit educational testing & assessment
Advocate Healthcare
Non-Profit to assist with healthcare advocacy
AARP
Non-Profit that advocates, empowers and assists the elderly
People Inc.
Non-Profit that helps those with disabilities live independently
City Year
Non-Profit helps students who are struggling
Habitat for Humanity
Non-Profit that helps provide homes to families in distress
Feeding America
Non-Profit that supports food banks and food rescue
YMCA
Non-Profit that supports physical fitness
America’s Foundation
Non-Profit that supports an immediate response to emergency medical needs and supporting long-term health care initiatives. Disaster relief and humanitarian aid organizations.
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