Non-Profit Application

Applying for a mortgage as a nonprofit can be more complicated than purchasing as an individual or business. Not only must you demonstrate that your organization can financially sustain itself and the new property -- you must also deal with preconceived notions many conventional lenders have about nonprofits.

Lenders are careful in taking risks. They want a return on their investment, and usually finance organizations with proven successes. Conventional lenders sometimes shy away from small or fledgling nonprofits, which they view as having a higher credit risk.

Cast a wide net in your search for lenders. Consider neighborhood community banks and other institutions that specialize in working with nonprofits, such as South Shore Bank and Harris Bank in the Chicago area. These lenders often have less stringent guidelines than conventional lending institutions, and might consider your loan if you relocate to their communities. Contact nonprofit lenders who work exclusively with other nonprofits, such as the Chicago Community Loan Fund or the Illinois Facilities Fund. For more information about nonprofit lending resources, see the resource section of Chapter 8: Buying Real Estate.

Develop a realistic understanding of what your organization can afford, where its operating funds are generated, and how cash flow works within your organization. In addition, be alert when dealing with financial institutions that are unfamiliar with the workings of nonprofit organizations. The lender might suggest a larger loan than your organization can handle.