Church Guidelines

Eligibility

The Church provides a Statement of Faith/Core Values/Beliefs for organizational

Membership eligibility and approval. Late mortgage payments, liens and/or judgments

not acceptable.

Loan Amount

The loan amount generally should not be greater than 3 times the average annual general fund income.

The real estate used as collateral must meet loan-to-value guidelines based on a

first lien position on the following types of property:

Up to:

70% Multi Use                                                    70% Single Use (Church)

65% Educational

40% Camp and Conference

50% Raw Land                                    

80% Ministry Owned Residential

Capacity

The Church’s total debt payments for loans and leases should not exceed 30%

(15% for schools) of the average annual general fund income.

The Church’s general fund's Annual NET INCOME should be able to cover at least

110% of the new and existing aggregate annual debt and lease payments.

Additional Guidelines

The Church has a minimum 5 year financial history

At least three years of stable or growing church attendance history

Excellent payment history with current lender

Construction Loans need a minimum of 25% borrower contribution on construction

loans.

30% down payment required on purchases

Guaranteed maximum price contract

Payment and performance bond

Recording of loan documents before ground breaking

Tips for filling out a Sources and Uses Statement:

1. If you have recently acquired a site, the lender will want to know the actual cost

          of the site and the date it was purchased.

1. The City or County may require you to lay new roads, install turning lanes or streetlights, or install utility lines. Be sure to research these items when you are putting your budget together.
2. The "Cash Spent" amount should include all expenses incurred so far on items in the "Uses of Project Funds" categories. Be sure to include the date of this calculation.
3. The lender will want to know your actual cash on hand as of the date of your application. Only include funds that are available for the project; do not list funds that are committed to other uses.
4. You may include a reasonable projection of the additional cash you anticipate receiving prior to loan documentation. The lender's financing commitment letter may require that you have that cash before the loan is documented.
5. If you plan to sell an existing facility to generate the required funds, the sale must be completed before the loan documents are executed. Otherwise, the funds should not be considered as a reliable "Source".
6. To determine the amount of debt required to complete your project, start with the Total Uses figure and subtract all other Sources figures. That will be the amount your church seeks to borrow.
7. The Total Sources figure and your Total Uses figure must be an identical amount.

The Do's And Don'ts Of Church Financing

1. Deal with a lender who demonstrates an understanding of churches. Ask the lender how their church loan products, features, and covenants differ from their standard commercial loans. These subtleties can have a significant impact on future costs and your church's autonomy to effectively manage its operations.
2. Have your financing firmly in place, in writing, before starting your project. This will ensure that the project is started and completed in a timely fashion. This avoids the potential for costly delays and the inconvenience of mechanic's liens being filed.
3. Before tendering escrow dollars under an agreement to buy land or buildings, be aware of entitlement, zoning and environmental issues. An experienced church lender should be able to assist you with these matters.
4. Ask the lender and the contractor for references from other churches of comparable size. References will help you choose the right partners to make your project go as smoothly as possible.
5. You should have a lender who is knowledgeable about church operations and ministries and is experienced in lending to churches. Simply ask how many years the bank has been lending to religious organizations, how many loans have been made, and how large their full-time church lending staff is.
6. Look for an experienced church lender that can act as a consultant and be a referral source for other church industry professionals, such as fund raisers, growth planners, architects, CPAs, and contractors.
7. Avoid mortgage brokers or lenders who ask your church to sign something prior to analyzing a loan application and offering a financing commitment. You should not have to pay a fee prior to reviewing the terms and conditions of a firm offer.
8. Meet with the lender to discuss the scope of the project before you spend large sums of money on architectural designs that may be too costly to build.
9. Don't depend on the sale of your current facility or other uncertain future events to provide the funds to complete construction of your project. Circumstances beyond your control could disrupt your financial plans.
10. Deal with a bank that has demonstrated years of consistently lending to churches. Newcomers to the industry may not be there when you need to refinance or begin your next phase or project.

We hope these tips will help your project go smoothly

Church Loan Application CBL.pdf

BorrowerAuthorizationCertificate.pdf (60KB

Church EnvironmentalQuestionaire CBL.pdf (162KB);

Church Balance Sheet CBL (2).pdf (320KB);