Loans

STEP 1 : Credit Report

When you apply for a $25,000 loan or less, we would first pull your credit report to check the following:

• Over the past 24 months, have you avoided bankruptcies or charge offs larger than $500?
• Over the past 24 months, have you avoided outstanding collections larger than $500?
• For at least the last 12 months, have you been paying on one or more open credit lines and did you make all of your payments on time?
• Today, do you have at least 25% available to borrow on all open revolving credit lines?

The number of insufficient fund (NSF) fees per month cannot exceed on average three over the most recent three months. If the answer to all of the above is Yes, congratulations! You are preliminarily approved for a loan. We then calculate our loan offer for you as follows:

For existing businesses, we will offer you the lesser of:

• $25,000, or
• the loan amount that makes your monthly payment 1.5 times the largest monthly payment you have made over the last 12 months and are successfully repaying (excluding student loans), or
• the loan amount that makes your personal debt to income ratio no higher than .40
  whichever is least.

For start-up businesses that have generated less than six months of business activity in your business bank account, we will offer you the lesser of:

• $12,500, or
• the loan amount that makes your monthly payment 1.5 times the largest monthly payment you have made over the last 12 months and are successfully repaying (excluding student loans), or
• the loan amount that makes your personal debt to income ratio no higher than .40
  whichever is least.

If you accept our loan offer, we would move to verify your identity, then to close and fund your loan. We will require you to personally guarantee the loan. If we find any issues with our verification steps we reserve the right to withdraw our offer.

We also encourage you to schedule the first of your free coaching sessions with one of our Business Coaches!

STEP 2 : Financial Statements

If over the past 24 months you have been in bankruptcy or have been assessed a debt collection or charge off larger than $500, or if over the last 12 months you have been late on three or more payments, we will speak with you about a Credit Builder loan up to $2,500 that will help you prepare for larger loans in the future. Skip to Step 3 for details.

If you have not been in bankruptcy, been assessed a debt collection or charge off larger than $500, nor had three or more late payments in the last 12 months, but over the past 12 months you:

• have had one or two late payments, or
• right now you have less than 25% available on all open existing credit lines, or
• your largest trade line monthly payment is not large enough to meet your loan request

We will speak with you to better understand your financial position in order to make a loan decision. If you are an existing business your maximum loan amount will be capped at $25,000. If you are a start-up business (a business that has generated less than six months of business activity in your business bank account) your maximum loan amount will be capped at $12,500. We will utilize the bank data already collected during the application process to review your loan request. If additional bank data is available for use in analysis these can be added to the loan application.

Details for how your bank data will be evaluated are as follows:

• If you linked your bank accounts via Plaid during the application process we will use one year of transaction data for our review, or
• If you are unable to link your account via Plaid you may upload all pages of your last three personal and business bank statements. As this will require a manual review this may take longer than our standard review process.

We will then calculate your debt to income (DTI) ratio, which is a ratio we use to evaluate whether you are likely to be able to repay our loan. To calculate your DTI, we will:

• Combine your recurring personal debt payments with the loan payment you would make to us each month,
• Calculate your recurring personal income from your personal bank statements and add the capacity from your business bank statements (whether positive or negative) on top of your recurring personal income, and
• Divide the first bullet point above by the second bullet point above.

If your debt to income ratio is no more than .40 and you have three or fewer insufficient fund (NSF) fees per month on average over the most recent three months, congratulations! You are preliminarily approved for a loan.

If you accept our loan offer, we would move to verify your identity and existing debts, then to close and fund your loan. We will require you to personally guarantee the loan. If we find any issues with our verification steps we reserve the right to withdraw our offer.

We also encourage you to schedule the first of your free coaching sessions with one of our Business Coaches!

STEP 3 : Credit Builder

If you do not qualify for the loan you have requested based on the above, that’s OK! We can still provide you with a starter loan to help you improve your credit and cash flow. We call this loan a Credit Builder. Our standard term is 12 months.

To qualify, you must be current on your open trade lines and have no collections, charge offs or past due balances on accounts closed in the last 90 days from date of application. If true, we will review your last three personal and business bank statements to verify the following:

• you have established a business bank account for your business,
• you have been charged for non-sufficient funds (NSF) and overdrafts no more than three times per month on average, and
• your most recent month’s statements show a positive ending balance.

If we are able to verify these conditions are true, we will then calculate your current debt capacity (CDC) ratio, which is a calculation we use to evaluate whether you are likely to be able to repay our loan.

We will offer you the largest loan amount (capped at $2,500) at which your CDC ratio equals at least 1.20. If you requested less than that, we will offer you the loan amount you requested.

If you accept our loan offer, we will move to verify your identity, then to close and fund your loan. We will require you to personally guarantee the loan. If we find any issues during our verification steps, we reserve the right to withdraw our offer.

We also encourage you to schedule the first of your free coaching sessions with one of our Business Coaches!

STEP 1 : Credit Report

When you apply for a loan between $25,000 and $100,000, we would first pull your credit report to check the following:

• Over the past 24 months, have you avoided bankruptcies or charge offs larger than $500?
• Over the past 24 months, have you avoided outstanding collections larger than $500?
• For at least the last 12 months, have you been paying on one or more open credit lines and did you make all of your payments on time?
• Today, do you have at least 25% available to borrow on all open revolving credit lines?

STEP 2 : Financial Statements

If the answer to all of the above is Yes, we would then ask you to share your tax returns, bank statements, and financial statements with us.

You can provide your tax returns in one of two ways:

• Give us permission to retrieve your three most recent business and personal tax returns from the IRS, or
• Upload all pages of your signed returns.

We will then calculate your debt service coverage (DSC) ratio, which we use to evaluate whether you are likely to be able to repay our loan. To calculate your DSC, we will:

• Combine your after-tax income from your business return with 80% of your adjusted gross income on your personal return,
• Combine your existing debt with your requested new loan from us, and
• Divide the first bullet point above by the second bullet point above.

If your debt service coverage ratio is at least 1.20, you have met the tax return requirement for your loan request.

You can provide your most recent bank statements in one of two ways:

• If you linked your bank accounts via Plaid during the application process we will use one year of transaction data for our review, or
• If you are unable to link your account via Plaid you may upload all pages of your last three personal and business bank statements. As this will require a manual review this may take longer than our standard review process.

We will then calculate your debt to income (DTI) ratio, which is a ratio we use to evaluate whether you are likely to be able to repay our loan. To calculate your DTI, we will:

• Combine your recurring personal debt payments with the loan payment you would make to us each month,
• Calculate your recurring personal income from your personal bank statements and add the capacity from your business bank statements (whether positive or negative) on top of your recurring personal income, and
• Divide the first bullet point above by the second bullet point above.

If your debt to income ratio is no more than .40 and you do not have more than an average of three insufficient fund (NSF) fees per month over the most recent three months, you have met the bank statement requirement for your loan request.

You can provide your most recent financial statements by giving us permission to retrieve your last Profit and Loss Statement and Balance Sheet via your online QuickBooks account.

If your debt service coverage ratio is more than 1.20 and your debt to income ratio is no more than .40, you have met the financial statement requirements for your loan request.

If you accept our loan offer, we would move to verify your identity and existing debts, then to close and fund your loan. We will require you to personally guarantee the loan. If we find any issues with our verification steps we reserve the right to withdraw our offer.

We also encourage you to schedule the first of your free coaching sessions with one of our Business Coaches!

We serve businesses located in Illinois or Indiana, as well as entrepreneurs who live in these states and operate home-based or online businesses. We serve businesses who operate using a federal Employer Identification Number (EIN), a Social Security number, or an Individual Taxpayer Identification Number (ITIN). We lend to businesses operating in all industries except for the following:

• Lenders and quasi-financial institutions (e.g., pay day lenders, pawn shops, auto title loans, mortgage lenders, check cashers, money transfer services, etc.)
• Businesses engaged in illegal activities or the sale, distribution, or manufacture of firearms, pornography, or marijuana
• Businesses which present live performances of a prurient sexual nature or derive—directly or indirectly—more than 5% of their gross revenues through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature
• Businesses deriving more than one-third of gross annual revenue from legal gambling activities
• Private clubs and businesses which limit membership for reasons other than capacity
• Businesses principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting
• Government-owned entities (except for businesses owned or controlled by a Native American tribe)
• Businesses primarily engaged in political or lobbying activities
• Speculative businesses or real estate held for investment or as passive income

If you are approved under Step 1, we will calculate your offer as follows: We will offer you the maximum loan amount that makes your monthly payment 1.5 times the largest monthly payment you have made over the last 12 months (excluding student loans) and are successfully repaying, or $25,000, whichever is less. The maximum loan amount for start-up businesses is $12,500. If you are approved under Step 2, your loan size will be calculated based on DTI requirements explained below. If you or any co-applicant have an outstanding loan with A4CB, the maximum amount you can borrow will be reduced by your current balance.

The standard term for our loans is 36 months. The term can be extended upon request and approval by our team. We will offer you shorter term options if the calculations above show that you can afford a higher monthly payment. We do this because the shorter the term the less interest you will pay over the life of the loan, and we want to save you money if you have this option.

Anyone with an ownership stake in the business may apply for a loan, but we will evaluate the owner(s) with the largest stake in the business as co-borrowers. All owners with at least a 20% stake must sign for the loan, even if they aren’t the applicant or the majority owner.

To calculate your DTI, we will:

• Combine your recurring debt payments with the loan payment you would make to us each month,
• Calculate your recurring income, and
• Divide the first bullet point above by the second bullet point above.

To calculate your DSC ratio, we will:

• Combine your after-tax income from your business return with 80% of your adjusted gross income on your personal return,
• Combine your existing debt with your requested new loan from us, and
• Divide the first bullet point above by the second bullet point above.

To calculate your CDC, we will:

• Add up the ending cash balances over the past three months from your personal and business bank statements to determine your unused current debt capacity,
• Divide the result by 3 to calculate your average monthly net balance, and
• Subtract the monthly payment amount of your potential A4CB loan from your average monthly net balance to calculate your current debt capacity

Allies for Community Business reserves the right to exclude from our calculations a deposit based on the originator/payor.

Give us permission to retrieve your three most recent business and personal tax returns from the IRS, or upload all pages of your signed returns. At least one return must have been filed within the last 16 months.

Give us permission to retrieve your last 12 months of bank statement activity via your online banking site, or upload all pages of your last three bank statements.

Give us permission to retrieve your most recent Profit and Loss Statement and Balance Sheet via your online QuickBooks account.

After you have been approved for a loan, we will ask you to fill out a short questionnaire to help us determine the most efficient way to fund your loan. Based on your answers, we will ask you to provide the final documents we need to fund your loan. Once you have provided this information, we will prepare the closing documents for your loan and email the documents to you to sign. You will electronically verify your ID to sign your documents.

Once your documents are signed, we will fund your loan and process it with our loan servicer, Orion First/Contract Care. You will have the ability to set up an online account with Orion First/Contract Care to have 24-hour access to your account and the ability to make payments online.

A Community Lender will be available throughout the life of your loan to answer any questions.

All A4CB business loans are personally guaranteed by the borrower and co-borrowers. Therefore, we report our loans to credit bureaus as an active trade line for all borrowers using the borrower’s personal credit.

It is generally good practice to regularly review items on your credit report, such as personal information, credit accounts, collections, bankruptcies, and credit inquiries. On-time or delinquent payments can result in a positive or negative effect to your FICO score. This includes a charged-off loan.

Credit report disputes must be submitted directly to each credit bureau. A4CB cannot manage disputes via phone or email. For more information about filing a dispute, please click here.

Our loan servicer is Orion First/Contract Care. For loan payment questions please call Orion First/Contract Care at 866-851-8804 or email Orion First/Contract Care at cs@contractcare.net.

Loan proceeds must be used exclusively for business purposes including:

• Equipment
• Furniture and fixtures
• Inventory
• Leasehold improvements
• Refinancing Current A4CB Loan
• Refinancing other business loan/debt
• Vehicles (for business use)
• Working capital

A4CB loans and lines of credit are not intended for personal use including acquiring personal assets or consolidating personal debt.

A4CB reserves the right to collect additional documentation to validate the use of funds.

The Good Food Fund Loan is a low-interest term loan or line of credit available to eligible food and beverage entrepreneurs in Chicago. Made possible through the City of Chicago’s Good Food Fund, entrepreneurs will pay 3% in interest and 2% in closing fees over a term between one and three years depending on the loan size.

To be eligible for the loan, the business must be in the food and beverage industry and must operate in Chicago. A4CB reserves the right to ask for additional documentation to ensure eligibility criteria is met.

Funds are available for a limited time only! This loan will be offered until funds are depleted or until December 15, 2024 – whichever comes first.

The Good Food Fund also provides grants and free coaching to Chicago food and beverage businesses. To learn more, visit bit.ly/chicagogoodfoodfund.

1. Any minority- or woman-owned entrepreneur interested in growing a construction contracting business who wishes to borrow between $500 and $100K under our standard terms should apply using the process described above. If you qualify for the desired amount under our normal underwriting criteria through Step 1 then A4CB will fund that loan.
2. If you wish to borrow a larger amount than our normal underwriting would allow or you wish to borrow at a lower interest rate, you can apply to participate in HIRE360’s Business Development program here.
3. HIRE360 provides access to development/capacity building, technical assistance/back-office support, financial literacy, project management and business branding/marketing, and will help you prepare the documents necessary to apply for a HIRE360 Referral Loan from A4CB. Learn more here.
4. If you are a contractor participating in HIRE360’s contractor scaling up program, you can return to the prior loan application with A4CB to share additional documents including signed but unpaid contracts. A4CB will offer up to the lesser of 20% of the signed receivable contracts or $100K with an interest rate as low as 5.5%.
5. Loans under the HIRE360 program are a 1-year line of credit revolving period with a balloon balance due at time of maturity. The monthly repayment is interest only during the 12-month period.  At the end of the 1-year maturity date, the remaining balance owed is to be fully repaid by the borrower.
6. While you are repaying your loan, A4CB and HIRE360 will share information about your business opportunities and your progress towards repayment as we continue helping you grow.

Allies for Community Business offers revenue-based financing loans between $50,000 and $250,000 to established businesses who have a clear plan for growth but for whom our credit policy for term loans and lines of credit will not provide the capital they need. These loans will not require a fixed repayment amount each month, but instead will require the borrower to repay a fixed percentage of revenues earned each month. To learn more about this loan option, email us at RBF@a4cb.org. Applicants must have an existing relationship with A4CB either via a previous loan or via our business coaching.

Unlike many other variable repayment products available in the marketplace, A4CB will work with you to structure your loan so that you keep most of the wealth that you create as you grow. The basic terms are as follows:

• The size of your loan will be capped at 33% of the prior year’s revenues or $250K, whichever is less.
• The commitment fee will be 1% of the amount borrowed.
• The payment we will pull for each month will equal 7% of the previous month’s revenues.
• The minimum payment in any month is $100 even if you earned no revenues in that month.
• The maximum payment we will pull in any month will not exceed an interest rate of 19.9% even if the month was highly profitable, and therefore the annual percentage rate (APR) on the loan will not exceed 19.9% and likely will be considerably lower.
• Borrowers can prepay the balance due on the loan at any time, though that will change the calculated annual percentage rate.
• Payments will be pulled on the fifteenth day of each month.
• The loan will be considered as paid in full when you have repaid 1.25x the initial principal lent.
• Repayment of this loan must be completed within 60 months.
• Balances due at the end of five years will be converted into a three-year fully amortized term loan.

Beyond our standard eligibility requirements, revenue-based financing borrowers must have:

• A finalized A4CB Business Growth Plan that includes a defensible estimate for percentage revenue growth over the next five years.
• Revenues of at least $250,000 during the past year.
• Gross margin (revenue less direct costs divided by revenue) of at least 33% over the past year.
• Net margin (profit divided by revenue) of at least 7% over the past year.
• At least two years of business bank transaction history
• No bankruptcies, judgments, tax liens, collection activities, or charge offs in the last 24 months.
• At least 12 months of payment history on at least one open trade line.
• No more than two late pays over the last 12 months.
• No overdue payments on open trade lines.
• At least 25% available on open revolving trade line items.

For borrowers that successfully repaid their previous loan we offer our Loyalty Loan product. A4CB’s Loyalty Loan is available to recent A4CB borrowers who have successfully repaid your term loan or line of credit by faithfully following the payment schedule established at the closing. We will retain our standard underwriting criteria but substitute your repayment history to us in place of our debt-to-income or current debt capacity calculations. Borrowers can apply for one Loyalty term loan or line of credit if the previous A4CB loan has been fully repaid with on-time payments within the last 15 months; restructured or deferred borrowers are not eligible for Loyalty Loans. After receiving one Loyalty Loan, additional loan requests will be fully underwritten.

If you repaid your previous loan in advance of the original due date, you are still eligible for a Loyalty Loan if you paid all but the final three installments on your loan and made at least 12 monthly payments.

For borrowers originally approved between $2,500 and $25,000 (before fees), you must meet our Step 1 credit criteria explained above to receive a Loyalty Loan. For borrowers originally approved less than or equal to $2,500 (before fees), you must have no new bankruptcy filings, collections, charge offs or past due balances on accounts closed and you must be current on all open trade lines. The Loyalty Loan product is only available to borrowers whose previous loan was $25,000 or less (before fees) and approved under our traditional credit policy. Those loans approved under any special or enhanced credit policy are not eligible; these programs include emergency loan funds or any approval that utilized non-standard underwriting.

If you meet this criteria the usual debt-to-income requirement or current debt capacity will be waived and you will be eligible for 1.25 times the previous loan amount (before fees).