Will Your Charter School Get a Loan? How a Credit Committee Decides
Originally published in Charter School Facility Center , June 24, 2021
Applying for a loan can be a stressful process. Who decides whether a charter school loan will be approved? And how can a charter school bolster its application?
Many charter schools rely on Community Development Financial Institutions (CDFIs) for loans. CDFIs are mission-driven lenders who consider community benefit as well as financial factors when making loans. There are also commercial banks and private investment funds, both for-profit and non-profit.
Most lenders have a credit committee, a group of 3-5 people who review each transaction and decide whether it is a god fit for the lender. The credit committee is typically comprised of staff, board members, and/or others with finance, legal, and community development experience. When making a decision to approve a loan, the credit committee looks for a comprehensive picture of the charter school’s mission, academic performance, governance, financial strength, and community engagement in addition to the school’s financial story. Here are three things you can do to best advocate for a loan.
Author: Dana Stranz, Manager, Portfolio Management, Nonprofit Finance Fund