What’s Unique About a Commercial Loan for a Non-Profit Organization?

What’s Unique About a Commercial Loan for a Non-Profit Organization?Since non-profit organizations are funded through donations, obtaining a loan is a daunting process. However, loans are an important vehicle for achieving funding to contribute to social good. And, fortunately, they’re not quite as complicated as they may seem. Let’s take a look at non-profit commercial banking loans and how specialists like Arthur State Bank, a community bank in South Carolina, can help non-profits with the loan process.

Obtaining a Loan

Obtaining a Loan
In many respects, the process of obtaining a loan as a non-profit is similar to that of a for-profit business. Non-profit loans are usually taken by the organization itself, which is responsible for paying the loan back.

In some cases, however, a larger parent organization may take ultimate responsibility for the loan. For example, if a church takes out a loan, their regional organization, such as their presbytery or diocese, may back the loan as well. This helps secure the loan, making it less of a risk to lenders.

To obtain a loan, your non-profit should:

  • Talk to a knowledgeable loan officer about their situation and loan options.
  • Complete a loan application.
  • Be prepared to support the application with financial documents showing your organization’s income and spending.

Achieving Buy-In

Achieving Buy-In
Non-profit organizations are responsible to their donors, their governing organization, and the people they serve. That means getting a loan for a non-profit means getting buy-in from every level of an organization’s network.

Further, involving members and networks helps get your organization excited about your project and builds awareness of the initiative. For example, a church planning to buy a new building may launch a campaign inviting members to pledge funds towards the loan, building project awareness, support and funding.

While taking on debt can be intimidating, a well-promoted loan can help an organization expand its reach and boost its project’s impact. A good loan officer who specializes in non-profit commercial banking can help organizations develop ideas for getting their members involved in the loan process.

Paying off the Loan

Paying off the Loan
The terms of non-profit loans vary depending on the loan’s amount and purpose. Real estate loans, for instance, typically have a 15- to 20-year term.

Regardless of the term, however, many non-profits find it helpful to pay off the loan as quickly as possible – ideally within two to five years. While interest and enthusiasm for a new initiative are usually strong, excitement can wane over time. Paying off the loan sooner rather than later displays fiscal responsibility and keeps pledge campaigns from dragging on for years.

Your Experienced Partner

Your Experienced Partner

Arthur State Bank is a community bank in South Carolina that has been serving its customers since 1933. Our loan officers can help you and your organization:
  • Quickly determine how to best fund a project or initiative.
  • Navigate the loan process.
  • Position and share loan information with your organization or congregation.

Arthur State Bank has loan officers who specialize in partnering with churches and other local organizations. They offer years of expertise and help organizations navigate the financial process. The loan officers at Arthur State Bank are willing to do question and answer sessions with board of directors, congregations, as well as building and finance committees to help them obtain the funding they need to grow.

Whether you’re looking to expand to a new building, invest in additional transportation, or otherwise boost your organization’s growth and reach, our loan officers are ready to help. We pride ourselves in providing exceptional customer service and supporting the missions of our local non-profit organizations. Contact us today to find out how we can help you grow.