Here you grow again!

By Ann M. Merkel, Senior Vice President and Chief Market Development Officer, The National Bank of Indianapolis

Congratulations! As the leader of your nonprofit, you have successfully led your team in growing and fulfilling your organization’s mission. In fact, your organization is serving more people than you ever envisioned — or planned for!

As we know, with growth often comes challenge — specifically, how are you going to fund all of this growth? Maybe you secured a new, large contract or you’ve received a large multi-year grant? Or maybe you’ve outgrown your physical space?

Regardless, you may be faced with a new challenge — asking your bank for short- or long-term financing. Here are some steps for turning that challenge into a success.

  • Get to know your banker before you have a need. Communicate regularly and familiarize your banker with your organization’s ongoing funding sources. Share your strategic plan and communicate the steps for achieving your plan. This understanding will allow your banker to be your advocate when it comes to approving your loan request.
  • Be prepared to discuss your financial statements. You’re a skilled administrator and an enthusiastic visionary for your organization, but if you don’t have a strong understanding of your organization’s finances, include your controller, financially-savvy board member or your CPA in the conversations when you’re seeking a loan.
  • Confirm your financial statements are current and accurate. Most funders, including banks, prefer to rely on CPA-prepared reviewed or audited financial statements. Make sure your banker understands the nuances of nonprofit accounting, as well as how contracts or funding cycles affect your financial results.
  • Communicate a clear plan for how you intend to repay the loan. Create a financial statement forecast that addresses not only the impact on your organization of the new or expanded revenue source, but also the additional related expenses. Your banker needs to have a clear understanding of the additional cash flow that will be available to repay the loan.
  • Identify the asset(s) that you will use to collateralize the loan. If that asset is real-estate related, include the cost of “due diligence” items (appraisal, survey, title work, etc.) into your financial forecast.
  • Share the feasibility study, if your organization is engaging in a capital campaign to repay the loan. If this isn’t your first campaign, be prepared to discuss the size and success of previous campaigns.

The suggestions outlined above will not only be of benefit when times are good, but will also pay dividends should your organization experience a decrease or interruption in its annual revenue stream.

A solid banking relationship is especially critical when your organization faces an unexpected financial challenge. Communicating early and honestly with your banker will increase the likelihood that your bank will be willing to work with you during the challenging time. As a nonprofit administrator, you know very well that your donor relationships are built on mutual trust and take time to cultivate; and, the same can be said for your banking relationship, too!


In her role as Senior Vice President and Chief Market Development Officer for The National Bank of Indianapolis, Ms. Merkel is responsible for cultivating and maintaining high profile corporate, individual and community relationships.

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