Applying for a Line of Credit for a Not-for-Profit Organization

The best time to secure a line of credit is when you don’t need one!

Line of Credit picWhen Should a Not-for-Profit Secure a Line of Credit?
The best time for your organization to secure a line of credit is when you are doing very well. That means, you should get one when you DON’T need one!
When applying for a line of credit, lenders will determine how credit-worthy you are. They will look at your credit score and your ability to pay the loan back. You will be able to borrow more with a lower interest rate with a good credit score than with a bad one.
Therefore, it is best to approach a lender at the end of your peak season and when your organization is doing well financially. Lenders will base their credit limits and interest on a variety of factors including your most recent cash flow statements. Apply when those statements look their best.
Having a good line a credit provides some security for a not-for-profit in the event of an unforeseen financial issue that may arise in the future. Once you decide to approach a lender, it is a good idea to ask your accountant for help with preparing your cash flow statements.
Your organization may not need a loan now, but should you require one in the future, your planning ahead could save you a lot in lower interest rates-- and save you from a lot of headaches!
By Judy Dear, NE Kelly & Associates, LLC