I run a nonprofit, cooperative or benefit corporation. What are my options?
Grants, CDFI loans, foundation program-related investments, co-op member shares and bank loans, cheapest first.
Your legal structure decides which doors are open. A 501(c)(3) or other nonprofit organization has no owners and cannot sell shares, while a cooperative is owned by its members and a benefit corporation is a for-profit corporation with a public benefit in its charter.
- Which SBA and federal loans allow nonprofits and co-ops: standard SBA 7(a) and 504 business loans are restricted to businesses operated for profit (13 CFR 120.110(a)), so nonprofits cannot use them — with the narrow exception that SBA Microloan intermediaries may lend to nonprofit child-care centers (13 CFR 120.707), and SBA physical disaster loans are open to private nonprofits of any size. Cooperatives and benefit corporations run for profit are eligible for SBA 7(a), 504 and Microloans under the SBA's definition of a business concern (13 CFR 121.105), provided they meet the SBA's size and ownership rules.
- Program-related investments (PRIs) and CDFIs: under section 4944 of the Internal Revenue Code and 26 CFR 53.4944-3, private foundations can make program-related investments — loans, loan guarantees or equity investments whose primary purpose is to accomplish the foundation's charitable mission, where making money is not a significant purpose. Both nonprofits and mission-aligned businesses (such as businesses creating jobs in low-income areas) can receive PRIs. Treasury-certified Community Development Financial Institutions (CDFIs) also lend to nonprofits, cooperatives and small businesses in underserved communities.
- Raising money from co-op members and the community: a cooperative can raise capital from its own members through membership shares, preferred shares, member loans and retained patronage dividends (26 U.S.C. 1388). Securities sold by farmers' cooperatives tax-exempt under section 521 are exempt from federal registration under section 3(a)(5) of the Securities Act (15 U.S.C. 77c(a)(5)), and other co-ops often use the federal intrastate exemption or state cooperative securities exemptions.
15 routes to look at, cheapest first
Compare the first 4 side by side- L0
Free or nearly free
Little or no cash cost, though most take time and admin. Some bring money in, and a few have small fees.- Grants, tax credits and prizes
Prize competitions and accelerators
Cash prizes from federal agencies and others for solving a set problem, and accelerator or incubator programs that give coaching, contacts and sometimes money. Prizes take no ownership; many accelerators do, so read the terms.
6 months or more - Grants, tax credits and prizes
State and local grants
Money from a state, county or city that you do not repay, usually tied to creating jobs, investing in a place or a set purpose. Rare, competitive and slow, and the field is full of "free government grant" scams.
6 months or more - Crowdfunding and community finance
Donation crowdfunding
Ask the public to give money online to a cause or project, with nothing promised in return. Nothing to repay and no shares given up, but people rarely give to a business run for profit, and donors cannot deduct gifts to one.
Weeks - Crowdfunding and community finance
Rewards crowdfunding
Raise money online from many backers who get a reward, often the product itself, instead of a share of the business. No repayment or dilution, but you must deliver what you promised, and the money is usually taxable income.
Months
- Grants, tax credits and prizes
- L1
Very cheap or subsidised
Borrowing on better terms than the market, usually because a public body, community lender or large buyer is involved.- Government-backed and community lending
Community development lenders (CDFIs)
Loans from community development financial institutions: mission-driven lenders certified by the US Treasury that serve low-income communities and people who find it hard to get finance elsewhere, often with advice alongside.
WeeksPersonal guarantee likely - Government-backed and community lending
New Markets Tax Credit financing
Loans or investments on better terms than the market, from a Community Development Entity that has federal tax credits to offer its investors, for businesses and buildings in low-income communities. Flexible and cheap, but scarce, slow and complex, so it suits larger projects.
6 months or moreLoans, or shares if you choose - Government-backed and community lending
Program-related investments and impact funds
Loans, guarantees or investments from private foundations and other mission-driven funds, made to further a charitable purpose rather than for profit, often below market rates. Cheap and patient money, but only when your business does something the funder's mission is about.
MonthsLoans, or shares if you choose - Government-backed and community lending
SBA Microloans
A small business loan of up to $50,000 from a nonprofit community lender that the SBA funds, for working capital, supplies and equipment. The average is about $13,000.
WeeksUp to $50kPersonal guarantee likely
- Government-backed and community lending
- L2
Mainstream secured debt
Standard borrowing from banks, credit unions and mainstream lenders, often secured on assets or backed by a personal guarantee.- Government-backed and community lending
State small business capital programs (SSBCI)
Loans and investments that a state, territory or Tribal government helps a bank or fund make, using federal SSBCI money: it buys part of the loan, guarantees it, puts up cash collateral or insures it. You apply to the bank or fund, and what is on offer differs from state to state.
MonthsUp to $20mLoans, or shares if you choosePersonal guarantee likely - Bank and mainstream debt
Bank and credit union term loans
A lump sum from a bank or credit union, repaid in fixed installments over an agreed term, usually one to five years. Usually cheaper than online lenders, but slower, and usually secured on assets with a personal guarantee.
WeeksPersonal guarantee likely - Bank and mainstream debt
Business line of credit
A credit limit from a bank, credit union or online lender that you can draw on, repay and draw again, for short-term costs such as inventory, payroll and seasonal gaps.
WeeksPersonal guarantee likely - Bank and mainstream debt
Commercial real estate loans
A loan secured on business property, to buy, build or refinance the building you trade from or one you rent out. Long-term money at a lower risk to the lender than most business loans, but you need a deposit, and many loans end with a large final payment you must refinance.
Months - Bank and mainstream debt
Equipment leasing and sale-leaseback
Paying to use equipment that a lessor owns, with options to buy it at the end, or selling equipment you already own to a lessor and leasing it back to raise cash. Little or no deposit, but you may pay more in total and own nothing at the end.
Weeks - Bank and mainstream debt
Equipment loans and finance agreements
A loan or finance agreement to buy machinery, vehicles or other equipment now and pay for it over time. The equipment itself usually secures the deal, and tax rules can let you write off much of the cost in the first year.
Weeks
- Government-backed and community lending
- Equity rungs. These routes cost no interest, but you give up part of the ownership and control of your business. They are ranked by how much you give up, not by a made-up interest rate. Over time, equity can be the most expensive money of all.E1
Light dilution
You sell a small share of the company, usually to many small investors or people you know, and keep control of how it is run.
Worth knowing
- Remember that a loan or program-related investment still has to be repaid from earned income, contracts or pledged grants; a mission-driven lender will check your cash flow just as a bank does.
- Look first at foundations that already make grants in your field or region: a foundation can only make a program-related investment that furthers its own charitable purpose.
- If you run a cooperative planning a member share or member loan campaign, check your state securities regulator's cooperative exemption and disclosure rules before asking members for money.
- If you run a for-profit benefit corporation or worker/producer cooperative, you can also use the full ladder of SBA 7(a), SBA 504 and commercial bank loans alongside the routes below.
Sources
- 13 CFR 120.110: businesses that are ineligible for SBA business loans (non-profit businesses) · checked October 17, 2026
- 13 CFR 120.707: conditions on loans by intermediaries to microloan borrowers (including nonprofit child-care businesses) · checked October 17, 2026
- 13 CFR 121.105: how the SBA defines a business concern (legal forms, including cooperatives) · checked October 19, 2026
- IRS: Program-related investments · checked October 20, 2026
- 26 CFR 53.4944-3: exception for program-related investments (with examples) · checked October 20, 2026
- 15 U.S.C. 77c(a)(5) and (a)(11): exemptions for farmers' cooperatives and intrastate offerings (2024 edition) · checked October 20, 2026
Facts about each route are sourced on its own page.