Church    Financing       Center

There is a lot of information to be found about church financing, and it can quickly become overwhelming, particularly for a church that does not have experience in lending. Christianity Today has an article, Getting the Money You Need, which answers all of the basic questions that you probably have about getting started with the church loan process. It is a compilation of several common church financing questions, that do not go into a ton of detail, but are a great starting point for basic church lending information. Additionally, be sure to check out the important questions that you may want to ask your lender!

A church capital stewardship campaign is a method used by the church to raise money that will finance construction or improvement projects. This is a strategic financial plan that involves increasing the tithes and offerings from church members over a set period of time in order to quickly generate 1.5 to 3 times the amount of the church’s current tithes and offerings. The churches ability to successfully implement this strategy and produce an increase in funds will allow them to more easily borrow as well as pay off more quickly any necessary loans for construction or improvement projects. An article from an online church magazine outlines what a successful capital stewardship program will be able to do for your church:

• Raise the capital needed to accomplish church building goals through a professionally facilitated capital stewardship campaign plan
• Assist in securing church financing
• Secure 3-year pledges totaling 1½ to 3 times the current annual tithes and offerings
• Educate congregation members on the Biblical aspects of stewardship and the spiritual blessing of worship through giving
• Strengthen your leadership and staff in Biblical stewardship
• Increase the congregation’s awareness and understanding of the church vision though the capital campaign
• Clearly communicate the need to build and establish a case for action as part of the capital campaign plan
• Increase regular tithes and offerings in addition to meeting your capital campaign goals
• Validate your vision, mission and long range plans as part of the capital campaign
• Identify major donors, and improve relationships with old ones
• Create a capital campaign that will serve as the catalyst for change
• Create a strong church, focused on God, eager to accomplish the vision and make the building project a success

The idea of spending additional money for a building consultant on your church construction project might seem unnecessary to most, but with the help of an experienced, independent building consultant, your church will save time, money and effort, making the additional expense well worth it.

Many architecture and construction companies will offer their own consultation services for their clients. In some cases, however, these consultation services are merely an effort to sway you church’s building decisions in their favor. Because of instances such as these, it’s a good idea to hire an independent consultant who does not have a personal agenda in deciding where your church spends its money.

What does a church building consultant do? An article from an online church business magazine does a great job of summarizing what exactly your church building consultant will help you with:

• Identify and quantify needs - What does the church need to build and why is that the right thing to build to help the church become the vision and accomplish the mission of the church.
• Financial Feasibility - What can the church afford and how will they pay for a church building program. This may include helping the church prepare to receive a church construction loan or execute a capital campaign.
• Run a Capital Campaign - A capital stewardship campaign can help your church raise 1.5-3x your current annual budget in just 3 years.
• Assist the church - Assist by evaluating, selecting and negotiating with the architect, engineers, builders and other professionals.

Overall, hiring a consultant in the beginning stages of your church building project will be worth the minor expense required for their services in comparison to the great deal of time, money and effort that your church will save in the long run by doing so.

If your church is looking to use bonds to finance an improvement project or construct a new facility, then you may want to take a look at this article, called All the things you need to know about Church Bonds, which explains all of the “ins and outs” of the church bond process. This article includes an explanation and benefits of different types of bonds as well as the theological, financial and practical reasons that a church bond may be a better choice for you over a conventional loan.

The application process for a church loan is complicated enough as it is, but when you are unprepared the process will only become more difficult and time consuming. Having all of the proper documentation and knowing how to organize it can easily prevent such a problem, not to mention make a great first impression to the lender.

Christianity Today magazine addresses this topic and encourages churches to prepare well in advance of the actual application process in order to ensure that all of the necessary documents are in hand and have the correct information. The church loan process must be addressed in a business like manner rather than simply having a vague vision in mind.

Since the church financing process is knowingly complicated, it is far more than one individual person should be expected to handle alone. The church should develop a team of individuals to handle the task, particularly individuals who will be able to speak on behalf of the accounting, law, real estate, banking, and architecture aspects of the project at hand.

With a team of prepared individuals working together, the church loan process should run much more smoothly. To ensure that this is the case, and guarantee that you are properly prepared for the application process, use Christianity Today’s Loan Application Checklist, available here.

If your church is looking to build or expand in the near future, here is an article that explains each step of the church loan process in detail. While the process is somewhat similar to the standard commercial loan process, many people do not have a great deal of experience in this area. For that reason, this article is a good resource for understanding how the typical church loan process works, and can help churches prepare if they are looking to obtain financing for a construction project in the future.

Click here to read the article.

While researching for information about church loans and church financing, it’s easy to come across materials that can point out what major obstacles often arise during the loan process. These include problems that you’ve probably already heard about, such as difficulty obtaining a loan due to a church’s unique status, etc.

This most recent article I came across goes beyond just identifying the major problems that church’s face and does a great job of explaining why certain factors are problematic. For instance, it’s easy to understand that a church is unique from a typical business that might be trying to obtain a commercial loan, but the reason that lenders hesitate to lend to churches is that if the mortgage is not paid by the church, the property would be very difficult to sell because of its specific, unique layout. This is much different than a standard commercial building which can be easily sold and accomodate just about any other business.

Check out this article to find out more about the 4 major problems that churches face when obtaining financing and understand specifically why these problems occur.

Since most churches cannot afford to pay the cost of building a new facility or improvement projects on a current facillity, they are often in need of additional financing.

Here is a great resource containing numerous church financing related articles, including on called The Best Money a Church Can Buy. This article emphasizes the importance of doing research before deciding on a form of church financing (mortgage, best efforts bonds, etc.) and prior to choosing a lender (commercial bank, bond finance company, local bank, etc.).

There are a number of financing options available to churches that many people may not even be aware of; additionally, there are several sources through which a church can obtain funding, which is why it is crucial to conduct research to find the source that best fits your church’s needs.

Check out the article for more information about the different types of financing options and lenders, as well as a number of tips that are likely to help improve your church loan process.

A church loan is not the only option for churches seeking funding for construction or improvement projects. Church bonds are similar to church loans because they help finance church building projects. The difference is that while a conventional church loan comes from one lender, a church bond comes from multiple lenders who buy the bond offering.

For most churches, however, bond are probably not the best financial decision, as there are many more costs associated with obtaining financing in this way. These include much higher closing costs and a higher effective interest rate. It is important for the church to weigh the options carefully, as for some churches that are not in a hurry to pay off the bonds early, a church bond may be a better fit as opposed to a loan.

Click here for more information about church bonds.

Almost everyone at some point in their life goes through the process of getting a mortgage loan.  Some people have special circumstances where they need to get mortgage loan for a different type of building.  Lenders don’t only offer mortgage loans for family homes, but they offer loans for churches as well.

For those people who work at a church, especially the pastor or leader of the congregation, at some point a mortgage loan may be needed.  You may want to refinance a current loan, get a new mortgage loan to add on to your church, build a new church, or remodel your current church.

There are loans available for all of these needs.  Some of the types of church loans that are available include standard mortgage products like:

•    Fixed rate mortgage loans.  These loans keep the same interest rate for the life of the mortgage.
•    Adjustable rate mortgages.  These loans have a fixed interest rate for a specified period of time and then the rate becomes adjustable.
•    Bridge loans.  These loans allow you to purchase or build a new church while you are still waiting to sell the building you are in.
•    Debt consolidation loans.  If the church has a lot of revolving debt or various debts to pay you can get a loan to consolidate this debt into one low payment.
•    Refinance loans.  You can refinance the loan on your church in order to get a fixed loan with a lower interest rate or take cash out of the equity in your loan in order to remodel and make improvements or additions to the building.
•    Equity credit lines.  You can get a line of credit on the equity in your church for when you need the money for any needs.
•    Church loans can be 3, 5, or 7 year balloon mortgages for those churches that want a lower interest rate and show that they can afford to make a balloon payment or refinance after the set period of time.

It is important to remember that churches also have to qualify for loans just like individuals or businesses.  In order to find out how to qualify for a church loan you can contact a local lender and inquire about their loans for church buildings.