Loans are a minimum of $50,000 and can be used for anything from purchasing property, financing a fundraiser or purchasing supplies. Therefore a charity can use it to renovate their space, sponsor their annual gala or purchasing much needed supplies to help their constituents.
LENDonate was created by CEO, Vivienne Hsu who spent many years working in investment management. In a press release communicating the launch of the software, Hsu stated, “LENDonate is creating a new ecosystem for nonprofit finances, one in which all sides win.” She continued by saying, “The traditional loan experience for nonprofits tends to be long and arduous, generally accompanied by high costs. LENDonate brings all parties together to simplify and speed funding of high-quality loans, while empowering lenders to customize lending to meet their financial goals.”
Thinking about leveraging LENDonate? Nonprofits must meet certain criteria in order to be eligible to borrow money. Among these requirements - charities should be an established 501(c)(3) organization operating for at least three years. While it’s not a requirement, nonprofits who have at least one million dollars in annual revenue tend to get more loan bids than those who do not.
Once a nonprofit is vetted, their request goes on to LENDonate’s Marketplace where the bidding process begins. Investors can either 1.) donate money to the organization in which the organization is not required to pay the lendor back or 2.) the investor can choose to offer a loan to the organization complete with a low-interest rate that the nonprofits will then pay off. Once the loan is set in place, the nonprofit or charity make monthly payments back to the lendor. It is up to the lendor how much money they want to donate to a project whether it’s a small percentage or the entire loan itself. Once the loan is funded, LENDonate takes care of the entire underwriting process.
A tool within LENDonate is the Marketplace. Once in the Marketplace, lendors can search through a wide array of loan applications that provides them more information about the organization and the reason they are asking for a loan. This in turn allows future shareholders to make an educated decision on which loans to invest in.
The fee to use LENDonate is not unlike a fee a nonprofit would pay to get a loan from a bank. In many instances it’s significantly cheaper. Depending on the loan amount, the charity can expect to pay anywhere from a 2-6% fee.
Investors and nonprofits should be equipped with the internet to utilize LENDonate. Lendors and borrowers do not have to download any separate software to employ the platform.
Ease of Use:
Software that is easy to use is crucial to any nonprofits, for the sheer reason that those who work in nonprofits tend to wear many hats. To access LENDonate, borrowers and investors alike will only need access to the internet. The website itself is user friendly-using a standard dashboard to help users get to where they need to. If problems arise there is a Help section that can help answer any questions.
LENDonate is a platform in which investors and nonprofits can come together and get projects and initiatives funded. Lendors agree to invest in the nonprofit’s project, while the nonprofit or charity agrees to pay the shareholder back in monthly installments until their debt is cleared. Investors access potential projects by going into the LENDonate’s Marketplace found on their website. Once a lendor has made a decision to invest in a project, they can then decide to invest in a percentage of the project or all of the project. They can even decide to donate money to the cause without the expectation that the nonprofit will pay them back. Once the loan has been funded, LENDonate handles the underwriting process, enabling nonprofits to get their money faster.
One of the downsides is that there aren’t too many investors at the moment, but in the next few months the criteria to be a lendor is changing, allowing more people to invest in these projects essentially allowing more loans to be funded.
With that being said, LENDonate is a great opportunity for nonprofits and charities to get a loan to fund a project or activity, they wouldn’t be able to afford otherwise. LENDonate can be mutuality beneficial to both the investor and the borrower with the lendor investing in a project and the borrower receiving a loan. This is a very new platform so it will be interesting to see how it does in the next few years. If it’s successful, it could potentially change the way nonprofits apply and receive loans completely cutting out the bank and going straight to investors.