NeighborWorks Capital Provides Stability During COVID-19 Crisis

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Applications for our Stabilization Loans program have begun. This program features funds for general operational costs to help you and your staff get through the current COVID-19 crisis and thrive beyond it.

We are also extending the deadline! Stabilization Loans are now available through the end of 2020. Please contact your loan officer to apply.

NeighborWorks members find the loans attractive and the process smooth.

New Directions of Louisville

“The NeighborWorks Capital Stabilization Loan will allow us to move forward with several initiatives planned prior to the COVID pandemic, which will ultimately strengthen our financial position and long-term sustainability. Non-profit organizations in general have been inordinately affected by this crisis, so measures like this loan are a real blessing,”said Lori Flanery, President and CEO of New Directions Housing Corp. of Louisville, KY, who NeighborWorks Capital provided with a $500,000 Stabilization Loan. They also previously applied for one of our Federal Bridge Loans.

New Directions closed its headquarters to the public from March 15-June 15 under Kentucky’s shelter-in-place orders, and quickly pivoted many staff to teleworking. Much of its work serving the 913 families that rent from them continued as “essential” work.

“We are very proud that our organization stepped forward to meet new and different challenges as we continue to serve some of our community’s most vulnerable members who want and deserve something all people should have — safe, clean, affordable housing, and a place to truly call home,” Flanery said. 

They found the NeighborWorks Capital Stabilization Loans attractive for several reasons, including that it was unsecured, with particularly competitive interest rate and repayment terms, and that it was from a trusted friend and advisor organization. In addition, because interest is included in the loan amount, it allows New Directions ample time to recover from the effects of COVID. They also found the NeighborWorks Capital staff efficient, helpful, and responsive as they worked together through the process.

The Stabilization Loan will reduce New Directions’ operating costs and give it more flexibility and depth with unencumbered assets that could help it better navigate uncertain times, offering the ability to either mortgage or sell these properties for additional funds, Flanery said. It will help New Directions pay off an existing mortgage loan on its former headquarters that matures August 1, leaving it unencumbered, which helps them avoid payment of Unrelated Business Income. It will also drastically reduce their monthly payment, which was based on an aggressive amortization schedule; and help them pay off a small outstanding balance on another secured line of credit, unencumbering two additional valuable properties securing that line. 

They hold over $7.8 million annually in direct federal subsidy HAP/PRAC contracts for the 900 families that rent from them, meaning most tenants only pay one-third of their monthly income for rent, with the government paying the balance. So while COVID has some lost rental income, it is a smaller percentage of rent than most. In addition, New Directions has received rental assistance from various sources, including NeighborWorks America, and expects to apply shortly for additional rental assistance under the federal CARES Act. While they have seen an increase in PPE and other health and safety-related costs because of COVID, they also successfully applied for a PPP Loan to pay for payroll, mortgage interest and utilities, so have been able to maintain its workforce throughout the pandemic.

“The challenges are great with respect to the dual threats of the pandemic and systemic racism, especially in Louisville, where the tragic deaths of Breonna Taylor and David McAftee continue to be daily painful reminders of just how unjust and inequitable life can be for people of color. Yet we remain hopeful,” Flanery said. “It’s certainly hard to predict the future in this climate. We believe the Stabilization Loan will help ensure that we remain a viable affordable housing provider and advocate for many years to come.”

Codman Square in Boston

Codman Square Neighborhood Development Corporation (CSNDC) of Boston also applied for a $350,000 Stabilization Loan. We talked to them about the impact of COVID just as Boston went into their fast and strict shelter-in-place. Read more about how they worked to ensure the safety of residents and staff, and provided various forms of assistance to residents. CSNDC is a very local and high-impact organization working south of Boston with an ambitious project pipeline and several affordable apartment homes in development and construction. When all construction in Boston was put on hold, three of CSNDC’s projects were held up, some for months; another was delayed from July to December 2020.

If you’d like to learn more about this program, please contact your NeighborWorks Capital Loan Officer today!

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