Recovery Capital Loans

The disruptions over the past few years have impacted every aspect of nonprofit programs, operations, and staff. Nonprofits will need a very full toolbox over the next few years to recover, rebuild, and reimagine nonprofit finances and financial stability.

Philanthropy, donors, relief funds like PPP loans, and creative financial strategies have helped fill in gaps and tide organizations over to some extent. This year will be the time for rebuilding, and that requires capital.

There is no perfect definition for the term capital in this context. There is, however, a clear distinction between capital and annual operating revenue. Operating revenue is made of the funds that are contributed to, or earned by, a nonprofit and then used to pay the costs of delivering program services and managing the organization. Money in and money out. Annual operating revenue is great, wonderful, and essential. But it’s not capital.

Capital is made up of resources that are available for a nonprofit for other uses, including:

Flexibility: such as working capital to manage the cyclical cash flow of different revenue sources; to manage the timing of activities; or to plan for technology purchases and upgrades.

Resilience: such as cash reserves to weather an unexpected revenue delay, downturn, or surprise building repair; internal opportunity reserves to invest in an innovative program, expand development capacity, or to recover and rebuild from a disaster.

Recovery Capital Loans

Amount

Loans available from $30,000 – $300,000, to be determined by Propel in discussion with organization

Interest rate

3% fixed rate

Term

Loans available for 3 – 6-year term

Deferred payments

0% interest for first 6 months

Repayment

Interest only for months 7 – 12, fully amortizing for the term of the loan beginning in month 13

Loan forgiveness

25% of loan amount forgivable during the first two years of the loan

Other terms

Collateral is required and will be determined based on organization’s assets and financial reports

Eligibility

Nonprofit 501(c)(3) organizations in Minnesota and border communities. Priority to organizations that are led by and serving Black, Indigenous, and People of Color and are accountable to their community and clients; or organizations that are serving low-income communities and clients.