When suggesting this to a director of a nonprofit, he couldn’t understand why both parties wouldn’t choose to execute the loan in the least-bureaucratic and most inexpensive option and not through a registered financial institution.
In a previous post, I mentioned that a loan and a line of credit serve the same purpose. While that may be true in a broad sense, they actually can be quite different. Hence, the different names. The bank will look at both types of credit the same way, evaluating the amount of credit requested against the amount and type of collateral offered. The customer, however, only cares about one thing, which option is cheaper.
It is logical to assume that if a bank wants to appeal to the nonprofit community then it has to understand the nonprofit organization’s way of thinking (that’s where I come in). The opposite should also be true. If a charitable institution wants to appeal to a bank then it must understand the bank’s way of thinking. This is especially the case when using or applying for credit from a bank.