Loan Proposals for Non-Profits

Creating a loan proposal for a non-profit requires detailed information about the organization and its expenses.

Details for Loan Proposals

A non profit organization is one classified with a 501(c)3 status. There are certain exemptions they can apply for which assist in fund raising and grant writing proposals. When a non profit organization is started, they must have a clear and concise mission statement in place, which signifies the purpose of the group.

When applying for a non profit loan, the same standards apply in the application process as they would a business. Most non profits operate similar to a business with a much more stringent budget. The details a non profit would need to provide for a loan proposal are:

  • financial statements that detail profit and loss, personnel costs, and income from sources such as grants, fundraisers, donations, and other sources
  • personal financial information from directors or officers
  • statements showing any assets the organization may own, such as land or buildings
  • detailed statements pertaining to what the money is needed for, how it will be used, and how it will be paid back
  • any bids, purchase agreements, real estate values, and so on

It is also helpful for a non profit to provide information about their fundraising sources and ideas for projections. The development director of a non profit is constantly looking for new ways to increase funds and donations, which should be the main sources of covering operating expenses.

An ideal loan proposal for a non profit will detail the need for a beneficial expense other than operating, as they should be able to handle the day to day operations if budgeted properly. These expenses should be for the expansion of the organization, whether it is for additional services, housing needs, building or renovation needs, or other things that benefit their mission. Many non profits run without much for cash reserves, which can get them into trouble.  This is a consideration when being reviewed for a loan.

Types of Loans for Non Profits

Non profit organizations can qualify for SBA loans in addition to traditional loans, particularly the 504 loan program. A non profit should research the best available loans for their individual organization. Many loan programs will offer better rates for non profit organizations, and work with them to determine the final amount. Some non profits partner through city government to obtain the best rate and backing.