Announcing the Los Angeles Arts Loan Fund

The Center for Nonprofit Management’s Arts Loan Fund was established in response to the demonstrated cash flow needs of local nonprofit arts organizations. While large nonprofit institutions and businesses can use commercial lenders, community arts groups generally cannot draw upon such resources or may have to pay unacceptably high interest rates to do so. The Arts Loan Fund works to fill this gap and to provide a useful financial tool for small and mid-sized arts organizations and individual artists. The Loan Fund is independently funded by a consortium of local foundations, corporations, the City of L.A. Cultural Affairs Department and the Los Angeles County Arts Commission.

History and Mission of the Southern California Center for Nonprofit Management

Established in 1978 by the corporate and foundation community, the Southern California Center for Nonprofit Management helps organizations more effectively fulfill their missions by providing the highest quality professional management information, education, training and consulting services. Each year the Center serves more than 5,000 board members, staff and volunteers representing more than 1,000 nonprofit organizations.

Mission of the Los Angeles Arts Loan Fund

The Los Angeles Arts Loan Fund is dedicated to supporting the capital and operating needs of Los Angeles area nonprofit arts organizations and individual artists. The Arts Loan Fund is managed by the Center for Nonprofit Management and the Center for Cultural Innovation. The Center for Nonprofit Management will direct lending to nonprofit arts organizations and the Center for Cultural Innovation will oversee loans to individual artists.

The Arts Loan Fund will:

• Serve small and moderate budget arts organizations and individual artists
• Promote sound and effective financial management practices
• Provide access to business development and capacity building assistance
• Offer a variety of short to intermediate term financing products
  

Types of Loans

• Bridge loans secured by foundation grants and reimbursable contracts
• Performance/Product loans against projected ticket sales or earned income
• Enterprise loans to pursue capacity building/project specific opportunities
  

Qualifications

To qualify for a loan, an organization must:

• Be a nonprofit 501(c)(3) arts 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 defined source of revenue to repay the loan
  

Terms & Conditions

Terms and conditions will vary for each loan, based on the credit quality of the borrower and the terms of the 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 loan amount, payable only if the loan is approved.
  

Application Process

Before submitting a formal application:

• nonprofit organizations should complete this Pre-Qualification Inquiry free of charge to find out if you might qualify for a loan. A formal application package may be requested from
  Bruce Rosen, Arts Loan Fund Program Manager
  213-346-3262 and brosen@cnmsocal.org
  or
  Alice Ngo, Program Assistant
  213-346-3257 and ango@cnmsocal.org.

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

Loan requests are reviewed and approved by a professional loan committee. In general, the committee reviews loan requests within two weeks after a complete loan application package is submitted.

Contact Information

For more information about the Los Angeles Arts Loan Fund, please contact Bruce Rosen, Arts Loan Fund Program Manager
213-346-3262 and brosen@cnmsocal.org

Information about loans for individual artists is available from
Cora Mirikitani, President and CEO of the Center for Cultural Innovation,
213-687-8577 or info@cciarts.org.