The Vital Role of Non-Profits and Social-Impact Companies
Non-profit organizations are critical to our country’s well-being. They provide critical services to correct social issues and other problems not addressed by the for-profit industry. At Startup Capital & Expansion Funding we are very thankful for the role non-profits play in promoting the social, economic, and cultural development of our communities.
That goes for benefit corporations (B-Corps) and low-profit limited liability companies (L3Cs). We appreciate that corporate law is getting progressive and offering new entity types like B-corps and L3Cs for entrepreneurs that want to make money AND do good in the world. If you aren’t familiar with these new entity forms, take a look at http://businessattorneyinaustin.com/corporate-law-gets-progressive-b-corps/
Non-profit Organizations Need Cash, too
If you run a non-profit organization or other social impact company, you know that cash is important to your growth. In fact, capital may be even more vital to the growth and success of a non-profit than it is to a for-profit business because sales and donations in non-profit organizations tend to be even more erratic than in the for-profit arena.
Whether you run a church, a childcare, a group home, we are available to talk to you about your financing needs. We lend to 501(c)(3) organizations, although you do not need to be one to qualify for our programs. And, we don’t shy away from political and other cause-driven organizations.
We also happily provide loans and other financial solutions to benefit corporations (B-Corps) and low-profit limited liability companies (L3Cs). Benefit corporations and low-profit LLCs are, in our opinion, a little more like for-profit companies than non-profits, but not all financial companies agree and take the time to understand what they are and how to provide financial solutions to help these new and exciting companies grow and achieve their goals
Loans to Non-profits
Most lenders don’t understand lending to non-profits. They don’t like it and won’t do it. Some lenders are turned-off by the word “non-profit,” perhaps thinking that a non-profit company won’t have the same incentives and motivation to work hard to repay its debts. That’s silly. Other lenders have political or philosophical problems with the mission of certain non-profits. Or, they are worried about a backlash in the media if they can get involved with certain causes. We don’t worry about these things.
If you run a non-profit organization and need money, we can help. We have loans available to purchase assets, including buildings and equipment. We also provide short-term loans for working capital or to smooth out bumps in the road that might arise due to erratic inflows of donations.
Our loan programs for non-profits are similar to our for-profit programs. We are a direct lender and partner with dozens of nationwide lenders. While most of our partners won’t lend to non-profit organizations, a couple will, so between our direct lending and our partners, we have a variety of options available. Rates, fees, and terms all vary considerably. One thing to note: the Small Business Administration’s most popular programs – 7(a) and 504 – are not available to non-profit companies.
When it comes to benefit corporations and low-profit LLCs, we have lots and lots of options since they often qualify for more traditional for-profit programs.
Invoice Factoring for Non-profits and Other Social Impact Companies
Through GrowCo Factoring & Financial, we pioneered invoice factoring to non-profits. It is still very tough to find a factoring company that will purchase accounts receivable from a non-profit. But, we love working with non-profits. They are some of our best customers and it feels good to help them with their cash flow needs while contributing to great causes.
In 2012, public charities reported over $1.65 trillion in total revenues. Almost three-quarters of those revenues were from service revenues, including fees from working with local, state, and the federal governments. Government units almost always demand payment terms – 30 days, 45 days, 60 days … that’s a lot of invoices waiting to be paid and a lot of time waiting! We can almost always underwrite your government invoices very quickly since information is more readily available on most governmental divisions than private companies.
If you have outstanding invoices for goods or services you have already provided, we can turn those into immediate cash for you. Selling accounts receivable is not a loan. You are selling an asset so you are not creating debt on your balance sheet, which may be prohibited or restricted in your organization’s bylaws or other legal documents.
How We Can Help
If you run a non-profit organization or other social impact company and need a lending partner that “gets it,” call us. We understand the particular financial needs of non-profits, B-corps, and L3Cs and we have tailored loans and financial solutions to help you grow and achieve your goals. Call us today at 512.910.2700.