Church Loan Financing and Construction Loans for Churches – Company Blog

Satisfaction with Church Building Projects

Church Financing Center Staff — Fri, 01 Aug 2008 19:45:57 +0000

Stephen Anderson, a church building consultant and author of the book Before You Build, which I have referred to many times in previous posts, has also written an article based on the research of over 320 churches who have recently undergone construction projects, called Insights on Achieving a Positive Church Construction Experience. Based on his studies, Anderson has concluded that there are three major points of dissatisfaction for churches concerning the building process:

Most churches feel that the builder encourages them to build facilities that are too small for their needs
Churches are more satisfied if their new facilities are multi-purpose buildings or consist of multiple buildings (rather than fellowship halls for example)
Churches that do not conduct feasibility studies tend to be less satisfied with the outcome of the building project

For churches considering a construction project in the future, awareness of these points of dissatisfaction for other churches can make for better construction planning and a higher level of satisfaction with the completed project. Check out the article for more details about the study and in-depth information about the three points of concern described above.

Designing a Church Building Project

Church Financing Center Staff — Thu, 03 Jul 2008 19:13:09 +0000

After obtaining financing for your church construction project, whether it be a small improvement project or an entirely new facility, it is time to make decisions about building design based on the needs of the church, as well as what the church can afford based on the loan amount. An article from the book Preparing to Build addresses important aspects that should be considered when considering building plans, including cost and efficiency. Check out the article for more information.

Tips for Daily Church Finances

Church Financing Center Staff — Mon, 09 Jun 2008 21:15:40 +0000

While the main focus of Church Financing Center.com is to assist churches looking to build or make improvements to their facilities, I thought it would be a good idea to post some information that pertains to the general, daily finances of the church. It’s important for a church to understand these basic aspects and to develop a solid financial foundation to accommodate regular day to day activities before attempting to finance a new project.

Check out all of the tips and facts below from an article by the North Indiana Conference of the United Methodist Church:

Typical churches require a budget 1,000 times their average weekly worship attendance in order to fully fund their ministries. Or, their weekly gifts are at least $20 times the average weekly worship attendance.
Total compensation for staff may be 50-60% of a small church’s total budget but 40-45% in a larger church.
Between 5 and 10% of the total budget should be spent on outreach and evangelism.
No more than 20-25% of a church’s total expenditures should be for debt retirement.
It’s not wise to give more than 35% of your budget to missions; it will begin to limit your future ministry and growth.
It’s best to raise 50% of funds needed for building projects before beginning construction (25% if land is already paid for).
Having an offering drop box in a church’s lobby can increase donations.
Sometimes the cost for a special part of the vision, such as hiring an additional staff person, can be seen as a mission outreach and thus, at least for a few years, be funded out of the church’s mission budget. Or in the case of a building expansion, the funds could come through a capital campaign.
Expect additional program staff’s salaries to be paid through new giving units within 6-18 months.
A church usually will raise far more money in a capital campaign if it uses a professional fund raising company.
A church’s pledge drive should always come before the budget is formulated

Tips to Consider Before Building Your Church

Church Financing Center Staff — Wed, 28 May 2008 19:53:18 +0000

Here are some tips that I haven’t seen before that are definitely great things to think about when developing your church construction plans. These are points that can be easily overlooked or completely forgotten altogether, such as understanding the demographics of your church to consider what the space in your building plans will be needed for and the best time of year for capital campaigns, etc. Check out the article to see all of these great tips.

Answers to Important Questions

Church Financing Center Staff — Wed, 21 May 2008 21:09:20 +0000

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!

Choosing an Architect

Church Financing Center Staff — Tue, 13 May 2008 19:08:23 +0000

I have posted a few links to articles in the past from the book Preparing to Build, which is for churches looking to build new facilities or make improvements. I found another very useful article from the same book called 75 Questions to Ask When Hiring a Church Architect. I think this article is important to review because churches may often get caught up in worrying about the financing and time frame issues of their project and may overlook the importance of choosing an architect that can meet your church’s specific needs. Check out the article if your church is considering a new construction project…it contains a lot of great questions that are important to ask.

Unforeseen Costs in Church Construction Projects

Church Financing Center Staff — Mon, 05 May 2008 18:16:04 +0000

While many churches may think their budget should be based on the initial estimate proposed by the architect, this is only a ball park figure. There are a number of steps throughout the construction process in which this number could drastically change and churches must be financially prepared to deal with this increase in cost.

An article by Scott Rolfs called Account for Increases in Building Cost addresses the major points in the construction process during which churches should expect a budget increase, which are described below:

The Preconstruction and Bidding Phase: At this point, the plans have been completed by the architect and an initial budget has been predicted. During this phase, however, costs for things such as site development, cost for construction in your particular marketplace, etc. may cause a large increase in the cost of construction.

Final Municipal Approval: Before the construction can begin, there are several government bodies that must sign off to approve the project. Any appropriate changes must be made to the construction plans in order to receive government approval during this phase. For instance, perhaps guidelines for building codes have not been accounted for in your initial plans, such as fire sprinkler system, etc. These things can quickly add up and cause the construction budget to increase.

Actual Construction: During the actual construction phase, there may be opportunities during which the church can make modifications to the original plan, or perhaps there will be surprise costs due to unexpected problems that were not taken into account in the original budget. If these situations arise, they can also play a large part in the expanding cost.

The bottom line is, a church must be financially prepared for any unforeseen costs that may arise during the construction process. There is not budget that is guaranteed to be set in stone, so the church must be able to account for this financially.

Capital Stewardship Campaigns

Church Financing Center Staff — Thu, 01 May 2008 18:54:54 +0000

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

Benefits of a Church Building Consultant

Church Financing Center Staff — Mon, 28 Apr 2008 19:19:07 +0000

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.

More on Church Bonds…

Church Financing Center Staff — Tue, 22 Apr 2008 20:11:52 +0000

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.