Loan fund helps small nonprofits in metro Atlanta

Dolph Ward Goldenburg received a phone call recently that made his stomach drop.

The message was from an out-of-state banker informing Goldenburg that the Atlanta nonprofit he runs had lost its line of credit.

"Financially we were doing OK, so I  was genuinely surprised that they pulled our line of credit," said Goldenburg, executive director of the Living Room, which provides housing, housing placement and financial assistance for low-income people with  HIV/AIDS who are homeless or at risk of becoming so.

The Living Room, which serves about 2,000 people annually, was waiting for reimbursement from the city of Atlanta when he got the bad news. He tried other banks with little success.

"This was a different time and a different economy," he said, "and banks were tighter with credit."

Few lenders were willing to work with smaller nonprofits, Goldenburg said.

Then he heard about a new loan program at the Community Foundation for Greater Atlanta.

The foundation recently launched the program to help small and midsize nonprofits in a 23-county area that were dealing with short-term cash crunches.

The Nonprofit Loan Fund will help small and midsize nonprofits with annual operating budgets up to $3 million maintain their operations and possibly participate in growth opportunities as they wait for pledged public or private grants or government contracts to come through.

The program is modeled after the Arts Loan Fund, which made 16 loans to small arts organizations. Of those loans, 15 were repaid and one was restructured.

It could fill a big need in Georgia, where about 82 percent of all nonprofits have annual operating revenue of less than $1 million a year.

The size of the low-interest nonprofit loans will range from $10,000 to $50,000, said Lisa M. Cremin, director of the foundation.

Cremin said the foundation recently conducted research in which half of the nonprofits surveyed said they experienced cash shortfalls in 2009. Of those, 82 percent attributed the shortfalls to the timing on receipt of funding, "not necessarily a permanent shortfall," she said.

The Living Room, which became an early test case, was able to borrow $39,000, which tided it over until payments arrived, thus avoiding layoffs, furloughs and a reduction in services.

"It wasn't a huge loan," Goldenburg said. "But sometimes it doesn't take a whole lot of money to really keep you going."

The agency, which expects to end its fiscal year with a surplus, repaid the loan. The nonprofit has also established another line of credit with a local bank, meeting another goal of the new fund to help build relationships between nonprofits and the banking industry.

Executives at small and midsize nonprofits say they would borrow funds from banks if the loans were available to them.