The Chronicle of Philanthropy and the Nonprofit Finance Fund have teamed up for a series of live web chats, the first of which was today. You can view a schedule of the chats here. Today’s chat focused on financing options for nonprofit organizations, here is the link to the transcript of the chat.
One highlight of the chat was a question of when a nonprofit should consider getting a loan:
Question: When should nonprofits start looking at loans?
Answer: The answer to this one is a little counterintuitive: npos (or any borrower) should look for credit–and a banking relationship–in good times, when they don’t have a pressing need for cash. Establishing a good relationship with a lender in good times will help the lender understand the nature of the organization, have faith in management, and be there–with some cavaets–when times get tougher. However, “emergency” and “loan” very seldom belong in the same sentence, because loans require trust, reliable revenue and predictability to be sound.