Cash Flow Loans and Lines of Credit

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Nonprofit Cash Flow Loan Program Description
     Eligibility and Terms

The goal of the Cash Flow Lending Program is to strengthen the financial capability and viability of nonprofit organizations serving the Greater New Haven area.  By providing cash flow for nonprofit organizations, the program helps solve immediate cash flow problems and address some of the underlying reasons for the shortfall, while allowing nonprofits to establish a strong credit history with us.  The Greater New Haven Community Loan Fund will lend funds against contract or grant receivables to cover an agency’s operating expenses.  The program does not cover pre-development financing that can be funded through GNHCLF’s other pools.

Eligibility Requirements

This program is designed for organizations that are:

1.     Nonprofits involved in the following activities/programs:

  • Social services, including youth enrichment programs, elderly services, domestic abuse and substance abuse programs, outreach and shelter programs, programs for people with disabilities, etc.
  • Educational programs including day cares, charter schools.
  • Health care programs including nursing homes, mental health programs, programs for people with HIV/AIDS.
  • Community development corporations and neighborhood organizations that serve low and moderate income communities.
  • Environmental or historical preservation programs.
  • Arts and culture programs

2.     Funded by government or foundation contracts, grants, or other acceptable receivables.

3.     Unable to obtain sufficient credit from a bank for operating capital or have an immediate need for funds.

Funding Priorities

Priority for funding will go to programs that serve low- and moderate-income individuals and families according to the guidelines established by appropriate government agencies.

Application Process

Nonprofit agencies can apply for cash flow loans before they have a need for money.  This allows the Fund to pre-qualify an agency to be automatically eligible for a loan when the need arises.  An agency must fill out a pre-qualification application, which requests organizational and financial documents.  GNHCLF is flexible about the time needed to process cash flow loans that are not to pre-qualified organizations.  If an emergency loan is needed by an organization that has not been pre-approved, the Fund will work toward processing the loan in a timely manner that corresponds with the agency’s time constraints.  All information required for a pre-qualification application must be submitted along with specific information about the accounts receivable that will secure the loan.

Loan Terms

  • Loan Amount:  $1,000  – $50,000
  • Interest Rate:  6% – 8%.
  • Fees:
    • Pre-qualification fee: $100
    • Closing fee:  1% of loan amount or $100, whichever is higher plus any associated expenses, if any.
  • Repayment:  the earlier of the receipt of a reimbursement check from the designated funding source or the term of loan.
  • Term:  1-12 months

Take Out:  Take out commitments must be in place at the time a loan is made.  Evidence of repayment sources such as executed contracts of grant reservations must be presented and staff will make confirmations with contacts at the funding agencies or foundations.  The Fund may make exceptions on a case-by-case basis.

Renewal:  If necessary, the loan may be renewed upon verification that the borrower has met all conditions of the loan and submits current financial statements and signed copies of contracts in question.   The agency must pay a recommitment fee before the renewal can become official.

Security:  an assignment of proceeds of grants or contracts receivable.  Other security such as mortgages on real estate or other property owned by the borrower, or guarantees may be required on a case-by-case basis.

Legal Documentation:  All loans will be evidenced by promissory notes in a form (or forms) agreed upon by the Lender.

Payment Schedule and Prepayment:  The payment schedule for each loan will be structured, at the discretion of the Fund, to meet the needs of the agency being funded.  In general, loans will be fully funded at closing with monthly interest only during the term of the loan.  There will be no prepayment penalty.

TO APPLY:  Contact Carla Weil at 203-789-8690 or via email at Carla@gnhclf.org