What you should know before you seek funding

Before you decide on pursuing a loan for your Church or Religious Organization, here are some points to consider:

1. Needs Analysis
2. Count the Cost
3. Beware of the"Fast Food" Mentality
4. Be Aware of the Proper Sequence of Events
5. Understand "Cash Flow"
6. Making it Come Together
7. Choosing a Guide

Needs Analysis:
Such a critical, but often neglected area. You should always be thinking, "The Big Picture."
Let us assist you in considering:

Space Needs- Now and Later

Regulator Requirements by Local Authorities (There are MORE than you think!)

Growth Curves

Ministry and Outreach

Your Vision

Count The Cost:
Common errors and hidden stumbling blocks can slow progress, frustrate and even stop a building, remodeling or relocation project.

You may rely on your ChurchCa$h consultant to guide you through the maze and allow you to benefit from experience gained over twelve years and with hundreds of churches across America.

Beware Of The "Fast Food" Mentality:
Many ministries fall victim to the "We Need It All Now" syndrome.

ChurchCa$h will guide you through the maze of planning a project that compliments, rather than conflicts with, your budget and ministry needs. Scores of thousands of dollars may be saved using wise counsel and taking the time to properly phase your project.

Part of your ChurchCa$h Consultant's service to you is analyzing your growth and borrowing ability prior to your committing funds to outside professionals.

Be Aware Of The Proper Sequence of Events:
All too often ministries needlessly spend untold thousands of dollars for architectural plans which design structures for which the ministry is unable to financially qualify to build.

Your ChurchCa$h consultant will assist you with:
Scheduling each aspect of your project to maximize the use of your funds and minimize wasted time and money.

Reviewing the qualifications of your building, legal or financial professionals to help assure they are capable of doing it right the first time.

Maneuvering through the maze of Federal, State, County or Municipal regulatory requirements which may negatively affect your project and drive up your costs. Among these regulatory requirements are environmental concerns, building codes or other local regulations.

Understand Cash Flow:
Ministries are typically not for profit in more ways than one. Every penny that comes in is spent. While this is great for ministry, it is destructive to a ministry's borrowing potential.
Your ChurchCa$h consultant will walk you through the maze of financial truths. Your borrowing power will be analyzed, strengths and weaknesses discussed and action plans developed to address short and long term needs of the ministry.

Making It Come Together:
Some ministries only want or need assistance here and there. Others depend on a full spectrum of services and guidance from assessing your need to working with local planning departments all the way through the project completion.
ChurchCa$h is ready to serve you in any part of the process... every step of the way.

Choosing A Guide:
So... you've heard "We need to..." and you're ready to get started. Are you ready to make the journey through the maze as painless and smooth as possible? Give us a call today.
Our consultants are ready to help you through the maze associated with financing.

Church Loans and Not- for-Profit Loans:
Church and Non - Profit loans are low document loans.
ChurchCa$h can obtain funding at the lowest interest rates,(depending on individual qualification), five year fixed plus five year fixed rate loan with a 20-year amortization. Any size membership. Construction loans are also available.

ChurchCa$h brings over 12 years experience in church financing.
Our company is based on the belief that our customers' needs are of the utmost importance.
Our entire team is committed to meeting those needs.
As a result, a high percentage of our business is from repeat customers and referrals.
We would welcome the opportunity to earn your trust and deliver you the best service in the industry.

Church Construction Loan to Permanent Loan Program:
Our network lender programs combine the church construction loan and permanent financing of your project. You qualify for the loan once, lock in the permanent rate, sign one set of loan documents and have up to 12 months to complete the construction.

During the construction period, interest is charged only on the funds that have been disbursed. When the project is completed, the permanent loan period begins.

This is a "One Time Close" church construction loan program to finance the construction of a new sanctuary, educational wing, gymnasium, etc. providing both the construction financing and permanent loan all in one closing. This means that you sign only one set of loan documents and do not have to worry about re-qualifying, re-appraisals, additional closing costs or signing additional loan documents.

Unlike a purchase transaction of an existing church, a Construction To Permanent Loan involves determining the value of something that is not yet constructed! To assist the appraiser and the lender in determining the value of the structure after it is built, information must provided as to:

What is going to be built or constructed?

What materials are going to be used?

How much will the material cost?

How much is the actual work going to cost?

How much did the land cost, what is it worth today?

How much will be spent on plans and permits?

You will have another very important item to be concerned with, which is your organizations choice of the general contractor who will be awarded the contract and the actual text of the construction contract.

From the general contractor, the lender will need a resume and a builder's application to be completed along with a credit check. This is for your protection as well as the capital provider's, and ensures that he/she is experienced, has a proven track record, and will be able to perform under the terms of the contract.

In addition to the above, our network lenders will of course need the standard income and credit documentation that is required in any real estate.

CHURCH MORTGAGE LOAN:
This type of loan is used to buy real estate and is always a first mortgage. Your organization may be purchasing land, a larger sanctuary, or even a day care center. Each of these has its own set of lending "rules" that dictate how your church mortgage can be structured.

Our network lenders will consider the property type, your organization's assets, income, and the amount of money you have to put down to determine how much they will lend and at what rate.

Church Financing – What you need to know

There are many different ways to underwrite a church loan; the two most popular methods are:

1)      Multiple of Income Approach:  This approach simply takes the gross income of the church and multiplies that number by a factor to determine the maximum loan amount a church is able to borrow. This is the easiest method to calculate and can be more lenient in terms of loan amount if the church does not have a lot of excess capital after expenses to service debt payments.

2)      Debt Service Coverage:  Uses the historical income of the church and their proposed total debt service payments to determine the ability of the church to service the proposed new debt payments.  This is a more complicated method but has the ability to be more lenient if the church has low expenses.

Besides debt service coverage you also need to be concerned with loan to value.   

Loan to value is the amount of money that a lender is willing to lend based on the value of the property expressed as a percentage.  

By way of example if a church has a property worth $100,000 and a loan against that property of $80,000 they have an 80% loan to value.  Many lenders do not offer loans to churches and of those that do many more will lend no more than 60% of the appraised value.

We offer a pretty unique way of looking at loan to value.  For a refinance we will generally go as high as 80% of the value but on a purchase we can sometimes go as high as 90% of the purchase price.

If you or someone you know (earn a referral fee for sending them to us) is looking for a church loan please call me so I can learn about your church and see how I can help you.

Our referral program is a great way to earn some additional income while helping out another church. 

To apply for a loan all you need to do is complete the application and send it back along with the last 3 years financial statements for the church.  

 I will generally be able to give you an answer in as little as 24 hours.

Church Construction Loan

Church Construction Loan to Permanent Loan Program

Our network lender programs combine the church construction loan and permanent financing of your project. You qualify for the loan once, lock in the permanent rate, sign one set of loan documents and have up to 12 months to complete the construction.

During the construction period, interest is charged only on the funds that have been disbursed. When the project is completed, the permanent loan period begins.

This is a "One Time Close" church construction loan program to finance the construction of a new sanctuary, educational wing, gymnasium, etc. providing both the construction financing and permanent loan all in one closing. This means that you sign only one set of loan documents and do not have to worry about re-qualifying, re-appraisals, additional closing costs or signing additional loan documents.

Unlike a purchase transaction of an existing church, a Construction To Permanent Loan involves determining the value of something that is not yet constructed! To assist the appraiser and the lender in determining the value of the structure after it is built, information must provided as to:

• What is going to be built or constructed?
• What materials are going to be used?
• How much will the material cost?
• How much is the actual work going to cost?
• How much did the land cost, what is it worth today?
• How much will be spent on plans and permits

You will have another very important item to be concerned with, which is your organizations choice of the general contractor who will be awarded the contract and the actual text of the construction contract. From the general contractor, the lender will need a resume and a builder's application to be completed along with a credit check.

This is for your protection as well as the capital provider's, and ensures that he/she is experienced, has a proven track record, and will be able to perform under the terms of the contract.

In addition to the above, our network lenders will of course need the standard income and credit documentation that is required in any real estate transaction.

Church Refinancing

GET CHURCH LENDERS COMPETING FOR YOUR REFINANCED CHURCH MORTGAGE

  

If you are considering church refinancing, the first steps are determining your short and long term goals and then evaluating the different types of church refinancing programs that are available to you.

Once you have your goals to what's available, you will be able to make an informed decision on how you want to proceed. The first thing to consider is your current interest rate. If the church was bought when interest rates were high or if you have an adjustable rate mortgage, chances are refinancing to a different- lower term may be able to save your church money immediately and over the course of your church loan.

If you purchased or financed when interest rates were low, church refinancing may not be the best thing to do. In the past, it was a general rule that refinancing makes good financial sense if your current interest rate is at least 1.5 percentage points higher than the current market rate and your church or organization plans to reside in the church for at least 3 years.

Consider a church refinance:

• Shorten Church Loan Terms and Reduce Interest Costs
• Church Debt Consolidation
• Request a Free Analysis for Church Refinance Savings! The most competitive interest rates!

Church Financing Parameters

ChurchCa$h Consulting uses the following parameters to determine whether we can assist you.

• 33% Income Test- Your organization's annual debt service should not exceed one third of its income.
• For example: If a church has general funds income of $750,000, the annual mortgage payment should not exceed $250,000. Building-fund monies can be used in the calculation in some instances.
• 75% loan to value ratio- The percentage of the loan to the value of existing buildings, land, and the project being financed by the loan should not exceed 75%. Example- Appraised or "book" value is $2,000,000. That amount, multiplied by 75% suggests a $1,500,00 loan amount.
• The organization must have an operating history of more than three years.
• We have a minimum loan requirement.
• A fixed-price construction contract is required on new building projects.

Church Financial Statements

We understand that most churches do not have accountant prepared financial statements and in most cases we are able to work with a church that has internally prepared financial statements. There are cases where a church will need have their financial statements prepared by an accountant in conjunction with closing the church loan. This situation can arise when the church loan is very large or we do not understand the internally prepared statements.

If the church needs to have financial statements prepared by an accountant we can provide referrals to a number of accountants we have worked with in the past. We can not guarantee the work of third parties, and it is the responsibility of the church to negotiate a fair price although we can give some guidance. We do not receive any compensation from accountants that you choose to work with. You are welcome to use an accountant that you are familiar with.

When selecting an accountant we recommend that you ask them the following questions:

1. How many churches have they worked with in the past?
2. Are they familiar with accounting practices for non profit organizations?

Financing For Churches

Financing For Churches

Why is it that Churches have trouble finding financing for their projects? And I am not just talking about new Churches, but well established churches with good income and great attendance. I have been involved in the field of finance for 10 years and for most of that time I have been helping Churches find financing that meets their needs. This Blog is specifically for giving and sharing of ideas that may help Churches get financing.

I will start out by explaining once and for all why Church lending is such a specialized type of lending and why many banks and other lenders will not touch church loans. They are generally single use properties, not personally guaranteed, and they do not file tax returns. To compound the problem most churches do not keep very detailed records.

What can Churches do that will make them more attractive to get a loan?
First, they can hire a good accountant to at least review their financials and make sure they are easy to understand. Secondly, they can write down a good explanation of what they are attempting to accomplish and how it will benefit the church and explain how the church will plan to pay for this project.
If the church will need to increase its revenue to be able to afford the construction of a new building, how will it increase its revenue?

Will the Church add more members or are they starting a building campaign? Lastly, you need to have the right documentation. It is key to gather the following documents and have them ready to submit with the loan request: Bio on the Head Pastor, History of the Church, 3 years income and expense statements and balance sheets, description of the transaction, cost breakdown if you are doing a construction or renovation project and pictures of the property.

Once you are prepared, then what?  Who will lend you the money and under what terms? This is the challenge and one way to find out is to complete an application that does not cost anything but will give you advice specific to your transaction by church loan experts. I recommend ChurchCa$h Consulting for many reasons, they know what they are doing and they give honest answers quickly and lastly because it is where I work