Frequently Asked Questions

What are examples of borrowing needs?
What are the qualifications for borrowing agencies?
What does it mean to be "creditworthy and able to secure a loan"?
What are the terms and conditions of the loans?
Who reviews my application?
How long does the approval process take?
Would I qualify for a loan?
How do I apply for a loan?
Is there a fee to apply for a loan?

What are examples of borrowing needs?

• A nonprofit arts organization has a contract with a government agency to provide program services and the contract is on a reimbursement basis. The Loan Fund will advance the funds to get the program started, and the organization will repay the loan from the cost reimbursements under the contract.
  
• A nonprofit organization has been approved for a grant from a foundation but will not receive the money for several months. The Loan Fund will provide funds now and the loan will be repaid from the proceeds of the grant.
  
• An organization is preparing for a benefit or revenue producing performance and needs money to stage the event. The Loan Fund will help finance these costs in anticipation of the revenues it will produce.
  

What are the qualifications for borrowing agencies?

To qualify for a loan, an organization must:

• Be a nonprofit 501(c)(3) organization, incorporated and operating in the greater Los Angeles County area
  
• Have three (3) years of operating history
  
• Have an independent Board of Directors with at least five unrelated members
  
• Have Board authorization to borrow
  
• Be able to submit financial statements and cash flow projections
  
• Be creditworthy, able to secure the loan, and have a specific source of future revenues to repay the loan
  

What does it mean to be "creditworthy and able to secure a loan"?

Qualifying agencies must be financially stable to receive a loan and must identify and designate a specific source of future revenues to repay the loan. In addition, borrowing organizations must demonstrate the capacity to repay loans in the event that speculative projections related to events or performances are not realized.

What are the terms and conditions of the loans?

Terms and conditions vary for each loan, but in general include the following:

• Amount: Up to $50,000 for nonprofit organizations, not to exceed 10% of the borrower’s current annual operating budget. Up to $25,000 for individual artists.
  
• Interest Rate: Based on the prime rate prevailing at the time of loan approval, and generally between the prime rate and prime plus two percent (2%).
  
• Maturity: Two years or less. The repayment schedule is flexible and negotiable, based on the borrower’s projected cash flow. The borrower must identify and designate a specific source of future revenues to repay the loan.
  
• Collateral: Generally a first lien on cash and investments, contracts and accounts receivable, and present and future contributions. Based on the analysis of the credit, the loan approval may require other or additional support. Collateral can also include assets such as unencumbered real estate, automobiles or other vehicles, and machinery or equipment.
  
• Loan Origination Fee: Up to 1% of the original loan amount, payable only if the loan is approved.
  

Who reviews my application?

A committee of financial professionals reviews all applications. The committee process for loan review is practical and professional. It seeks solutions acceptable to each client on a case-by-case basis. All applications and committee meetings are private and all information will remain confidential.

How long does the application process take?

The application process varies for each client; however, a typical application must go through a variety of steps including initial review by Center staff and subsequently, review by the Loan Fund credit committee. Typically, approval of applications takes 2-3 weeks from the receipt of a complete loan application package; however, an expedited review may be requested and will be accommodated to the greatest extent possible.

Would my organization qualify for a loan?

First, review the qualifications required to qualify for a loan from the Loan Fund. Next, complete and submit the Pre-Qualification Inquiry, an eligibility form asking the initial questions to see if you might qualify for a loan. After you have submitted the Pre-Qualification Inquiry, Center staff will contact you within 2 to 3 business days and supply you with the appropriate application package.

How do I apply for a loan?

Nonprofit organizations:
After submitting the pre-qualification inquiry and being notified by Arts Loan Fund staff of the organization's potential eligibility for a loan, agencies must submit a formal application for review by Arts Loan Fund staff and the Loan Fund credit committee. Applications may be requested from Bruce Rosen, Arts Loan Fund Program Manager, at 213-346-3262 or at brosen@cnmsocal.org.

Individual artists:
Individual artists should complete this Pre-Qualification form (PDF form). Loan applications for individual artists are available from Cora Mirikitani, President and CEO of the Center for Cultural Innovation, at 213-687-8577 or at info@cciarts.org.

Is there a fee to apply for a loan?

No fees are assessed until the loan money is disbursed. At that time, a loan originiation fee of up to 1% of the original loan amount is due. The prevailing interest rate will be charged on outstanding monthly balances.