The Working Capital Loan Fund provides small and medium sized arts and culture organizations with loans to address cash flow shortages and form long-term banking relationships. The program is open to arts organizations that are grantees of the MacArthur Foundation or the MacArthur funds at the Prince Charitable Trusts and the Richard H. Driehaus Foundation. Eligible organizations will have annual operating budgets between $250,000 and $3 million.
The objectives of the Fund are to:
- Provide a financing mechanism to address the short-term cash flow needs of small and mid-sized arts and culture organizations
- Strengthen financial awareness and management by deepening organizations’ understanding of cash management tools and organizational budget cycles
- Help organizations build institutional credit history, so that they may develop future, independent relationships with commercial lenders
Applicants to the Fund must:
- Be a current general operating support grantee of the Foundation’s arts and culture program, either directly or through one of the MacArthur Funds at the Prince Charitable Trusts or the Richard H. Driehaus Foundation, and
- Have an annual expense budget in its last fiscal year between $250,000 and $3 million at the time of its loan application
How to apply
To apply for a loan through the Fund, please contact Executive Service Corps of Chicago (ESC). A team of consultants is available to help you decide whether it makes sense to apply for a loan and to help your organization start the loan application process. The Executive Service Corps of Chicago has the technical and financial expertise to help you prepare the needed financial documents to apply for the loan through any of the participating financial institutions and to provide financial assistance through the life of the loan (including renewals).
The program will make available two types of loans:
- A standard line of credit with monthly interest payments and one-year terms. Loans range in size from $50,000-$100,000. The interest rate varies depending on the financial institution selected.
- One-time cash flow “bridge” loans with monthly interest payments and 6-month terms. Loans range in size from $25,000-$50,000. The interest rate varies depending on the financial institution selected.
The MacArthur Foundation has made program-related investments with local financial institutions to serve two functions: first, the deposit will act as cash collateral for these loans, which provides an incentive to make smaller loans that typically would not be attractive to banks; and second, earnings on the PRI will help offset the staff time for underwriting and loan monitoring, which cannot be paid through the low interest rates on these loans.
The Foundation is pleased to announce that in addition to its original relationship with Urban Partnership Bank (formerly ShoreBank), the $1.5M MacArthur Arts and Culture Loan Fund program is now available to existing MacArthur arts grantees through two additional financial institutions: American Chartered Bank and MB Financial Bank (see below for more information). The intent is to offer our grantees more choice in where they establish their banking relationships.
The Fund has been established through a partnership among MacArthur and the following organizations:
Each year the Foundation makes a few one-time grants for projects of special importance to the arts community. These special grants are designed to meet particular needs in the arts community or address special opportunities that will strengthen the sector as a whole. The MacArthur Arts and Culture Loan Fund was established in 2009 as a joint program between MacArthur’s programs on arts and Program Related Investments (PRIs).
The Fund is intended to address cyclical cash flow shortages experienced by small and medium sized arts organizations (with budgets between $250,000 and $3 million). The original loan fund was for $1 million over three years. Within six months, the entire amount was subscribed by 16 organizations. The program was expanded in 2010 with another $500,000 to meet continued demand for the loans.
The program was developed based on a fall 2007 study commissioned by the Foundation to assess the extent of small and mid-sized arts organizations’ challenges in managing cash flow; its impact on organization’s ability to accomplish its work; and potential ways that the Foundation could help to alleviate the financial stress felt by these organizations. The analysis concluded that grantee organizations experience routine, cyclical cash shortfalls due to irregular payments from funders or production expenses that precede revenue from ticket sales. Each arts group manages cash shortfalls differently, but all tend to draw upon the same set of options, many of which are not sustainable, including: (a) delaying payment of bills and sometimes staff salaries and artist fees; (b) relying on credit cards, both institutional and personal; (c) obtaining loans from board members. Stronger groups with more developed financial management systems may also launch new fundraising efforts and access lines of credit through banks.