How to Secure a Commercial Real Estate Loan for Nonprofits

So you’ve finally found it, the perfect working space for your nonprofit organization – but how do you obtain the funds to make the purchase? Capital campaigns are often necessary though time-consuming, and you need funds now. A commercial real estate (CRE) loan may be the perfect solution, but you need to be prepared. Our guide to securing a commercial real estate loan for nonprofits will give you an inside look at what it takes to get the property your organization needs to fulfill its mission.

Blog Image

The Challenge: the Capital Stack

What do lenders look for when evaluating a CRE loan? Lending institutions will invariably want to see the donations and firm commitments you have accumulated before they agree to loan you the large sums of money required to complete the purchase. Likewise, potential donors will want to see that you have financial support from a bank before committing to your project. It’s a chicken or the egg scenario that often leaves nonprofits in a bind. And, all of this takes time. Will the property you need still be there when the funding comes in? Platforms like LENDonate are uniquely designed to bridge this gap by creating a collaborative and expressive eco-system that helps match nonprofits with various lenders and benefactors who can tailor their offerings to each organization. Here are some important keys to consider when securing a CRE loan:

Cover the Basics 

Before considering approaching a potential lender, it’s important to be prepared by having your financials in order. The lender will ask you for things like your annual financials, internally prepared interim financials covering recent periods, and a projection of future years revenue and expenses. If you have existing debt, you will need those loan agreements and debt schedules. Also, you might want to consider consolidating your existing debt into the new loan. Most importantly, have a clear plan to repay the loan as laid out in a sensible financial projection.

Many lenders want to support nonprofits to transition from being renters to owners. Understanding  lender motivations can be key to your success in getting the loan. Your value proposition and pitch must be crisp. If it is buried within the volumes of documents requested, you risk the chance of getting unnecessarily rejected. For example, Berkeley Repertory Theatre successfully received a CRE loan, but only after years of searching for a financial solution. Only when the merits of the project were presented clearly and in ways that aligned with the lender motivations and requirements, were they able to get their CRE loan.

It’s Not You; It’s the Lender

You may have a solid financial outlook, a great history in the community, and a plan to pay back the funds, but your bank still declined your nonprofit’s CRE loan application. The rejection may make you feel bad, but the decision might not have been primarily about you. Loan decisions are highly subject to a bank’s own risk appetite at the time, which is determined by many factors that are enough to even give bankers grey hairs.

During 2020 when interest rates are at an all-time low, it’s natural for borrowers to want to secure a CRE loan to lock in that low rate. However, banks’ appetite for CRE loans has reduced dramatically, cutting way back on approving certain types of loans as a result of the pandemic and economic uncertainties. While they are still “open for business,” each bank has determined their appetite on what they want. What is rejected by one bank may be on another’s wish list, so finding the right lender that desires nonprofit CRE loans is ever more critical.

Seek Lenders Who Understand Nonprofits

A lender that has worked with nonprofits in the past and understands the way they work can be much more likely to lend to your organization. Community Development Finance Institutions (CDFIs) can be a great source of help in securing a loan. They traditionally work with underserved markets and will have a range of experience working with nonprofits. Even government lenders are there to help. LENDonate solves the chicken or the egg dilemma by making it easy to discover and connect with these types of lenders in a mutually beneficial way. By collaborating with lenders who understand nonprofits you can secure the funds you need, while the lender can increase their marketing opportunities and foster goodwill in the community.


So, if you’ve decided to take the leap from tenant to owner of your own commercial real estate keep these tips in mind. Whether it is because of an unexpected rent increase that could ruin your nonprofit’s budget or a landlord’s building restrictions limiting the scope and impact of your services, pursuing a CRE loan takes preparation, awareness and insight. A CRE loan can help provide your organization with both safety and flexibility to keep you effective and empowering your community for years to come. Think outside the box, be crisp and focused in your future plans, and reach out to LENDonate to help you find a financial solution to make it easier to become owners of commercial real estate.