Unlocking Tailored Lending Options for your Nonprofit

Embrace the power of a supportive banker to unlock new avenues of financial support and propel your nonprofit toward greater impact and success.

In the world of nonprofit organizations, having a supportive banker who understands your unique financial landscape and is willing to explore creative lending options can be a game-changer. While traditional funding sources may have limitations, a banker who goes beyond the conventional can unlock new avenues for financial support, enabling your nonprofit to thrive. In this article, we’ll delve into the benefits of having a banker on your side and why their knowledge in specialty lending options is vital for the success and sustainability of your nonprofit.

IN-DEPTH KNOWLEDGE AND UNDERSTANDING

A supportive banker with experience in the nonprofit sector brings invaluable knowledge and understanding to the table. They comprehend the challenges nonprofits face in cash flow seasonality, fundraising fluctuations, grant cycles and the reality of restricted funds available. This understanding allows them to assess your financial needs accurately and propose lending options that align with your organization’s mission and objectives.

TAILORED FINANCING SOLUTIONS

Creative bankers recognize that one-size-fits-all lending options may not suit a nonprofit’s diverse requirements. They are adept at tailoring financing solutions to accommodate the unique circumstances of your organization. Whether it’s a line of credit to manage cash flow gaps, program-specific loans, bridge financing for grant cycles or impact-focused financing, a supportive banker can customize lending structures to meet your specific needs. It’s important to your nonprofit’s long-term financial sustainability that your banker respect your and your board’s risk appetite with respect to debt and for the banker to fully inform you of the risks they anticipate that you may not have considered.

FLEXIBLE REPAYMENT TERMS

Nonprofits often face a temporary cash need due to periodic grant disbursements or donor contributions that are paid out over a long period of time. They also may incur expenses ahead of receiving service revenue under contracts from

government entities, foundations or from tuition payments from parents. This can lead to a seasonal working capital financing need. A creative banker understands this dynamic and can structure loan repayment terms accordingly. This customization provides your nonprofit with the breathing room needed to manage finances effectively.

COLLABORATION FOR IMPACT

A supportive banker can be a strategic partner in advancing your nonprofit’s mission. They can offer insights into funding trends, government initiatives or philanthropic partnerships that align with your organization’s focus areas. By fostering a collaborative relationship, your banker can connect you with potential funders, facilitate introductions or provide guidance on fundraising strategies, amplifying your impact and expanding your network.

INNOVATIVE FINANCING APPROACHES

Beyond traditional loans, creative bankers can help nonprofits explore alternative financing approaches. They can introduce concepts such as program-related investments, social impact bonds or crowdfunding platforms tailored to nonprofit initiatives. These innovative financing methods tap into the growing interest of impact investors and socially conscious individuals, potentially attracting new sources of funding for your organization.

Visit HeritageBankNW.com to connect with one of our experts and discuss your needs, questions and eligibility.

And, see page 20 for details on Converge, a new product we offer that allows you to accept donations anywhere.

SNAP & STEP LOAN PROGRAMS

At Heritage, we have a team dedicated to the nonprofit sector. They’ve spent years working with all different types of nonprofits—from schools to heath care facilities to affordable housing developers—and regularly think outside the box when it comes to devising sustainable financing solutions. Below are two loan programs that are a little more “unconventional”—but may be an option depending on your nonprofit’s circumstances and future plans.

The SNAP loan program was started in 2007 by the Oregon Facilities Authority (OFA) as a way for nonprofit organizations to obtain taxexempt financing quickly and easily. The program is an alternative to taxable commercial financing and can potentially save interest costs over the life of the loan.

Nonprofits typically use SNAP loan financing to purchase or construct facilities or to refinance loans previously taken out for those purposes. A bank (such as Heritage) makes the loan, which is then converted into a SNAP loan with OFA’s assistance. Both the bank and OFA use standardized documents that make the bond documentation process straightforward and far less expensive than a traditional tax-exempt bond.

Learn more about the SNAP loan program at oregonfacilities.org/snaploan-program.

The Streamlined Tax-Exempt Placement (STEP) program, run by the Washington State Housing Finance Commission, uses standardized documents so issuing tax-exempt bonds is simpler and more feasible to a wider range of borrowers and projects. ond. Because interest payments become tax-exempt income to the bank, the lender passes on their tax savings to the borrower in the form of a lower interest rate. Lower interest rates could potentially mean a lower debt service or a larger loan for the borrower. Lenders use the same underwriting criteria and determine the interest rate as they would for any typical commercial loan.

Learn more about the STEP loan program at wshfc.org/facilities/step.htm