How MWF’s Loan Disbursement Process Works —and Why It Protects You
When you receive a business loan, the first thing most entrepreneurs think is: great! The money’s in my account, and now I can get to work.
But when you borrow from MWF, things work a little differently — and that’s by design.
As a mission-driven Community Development Financial Institution (CDFI), MWF’s primary goal is to help entrepreneurs not just access capital, but use it wisely to grow strong, sustainable businesses. One of the biggest ways we do that is through our disbursement process, which directs loan funds to vendors and contractors on your behalf instead of sending the full amount directly to you.
“We know it might feel a little unusual at first,” says Hugo Aguinaga, Technical Assistance Specialist at MWF. “But our loan disbursement process was created to protect entrepreneurs from overspending, scope creep, or misusing funds in a way that could harm the business. We’re your partner — not just your lender — and we want to help you stay on track.”
What Is Direct-to-Vendor Disbursement?
When you’re approved for a loan through MWF, those funds are earmarked for specific future uses —equipment, marketing, build-outs, inventory, etc. — based on the plan and budget you submitted during the application process.
Once you’re ready to start using those funds, you’ll submit an itemized request along with invoices or estimates from the vendor, supplier, or contractor. MWF then pays the vendor directly, ensuring the funds go exactly where intended.
This disbursement model supports accountability, transparency, and success — especially for entrepreneurs who are navigating startup cash flow for the first time.
“We’ve seen so many examples of how this helps,” Aguinaga says. “Whether it’s avoiding overspending on materials or making sure a contractor is properly paid and insured, our role is to help you keep the project moving in the right direction.”
Why We Do It This Way
The direct-to-vendor process is different from traditional loans, which often disburse the full loan amount into the borrower’s account with few or no spending controls. While that flexibility can be appealing, it also introduces risk — especially for early-stage businesses.
“If you’ve never managed a large infusion of capital before, it can be easy to misallocate it,” Aguinaga says. “This system is designed to protect both your business and your credit.”
Plus, paying vendors directly for future purchases allows MWF to verify work is completed according to the agreed terms before releasing funds — a safeguard that protects entrepreneurs from potential issues like fraud, overcharges, or nonperformance.
What You Need to Prepare
To receive funds through this process, borrowers should be prepared to:
- Submit an invoice or quote from the vendor showing details of the service or product to be paid for.
- Provide any necessary supporting documentation, such as contracts or change orders if plans evolve.
- Work with MWF’s team to ensure timing and compliance with the approved budget and loan agreement.
“This isn’t meant to slow you down,” Aguinaga says. “In fact, it often speeds things up because we’re proactively identifying and solving potential issues before they cause problems.”
Need Help? We’ve Got You
While the disbursement process adds an extra step, it also adds an extra layer of support. If you’re unsure how to work with a vendor or need help organizing your future spending requests, MWF’s team is here to help.
“This is where your loan officer can help,” says Aguinaga. “They’ll walk you through how to communicate with your vendor, how to gather the right paperwork, and how to align everything to your business plan. You’re not doing it alone.”
Final Thoughts
MWF’s loan disbursement process might look a little different, but that’s because we’re different. Our mission isn’t just to lend money. It’s to equip entrepreneurs with the tools, knowledge, and confidence to build long-lasting businesses.
“This process keeps you focused, protects your funds, and builds trust with your vendors,” says Aguinaga. “It’s all about setting you up for success — not just today, but for the long run.”
