What exactly is a capital campaign?

What exactly is a capital campaign?
Our goal at ChurchCa$h Consulting is to educate churches and empower them to make wise decisions.
To that end, we provide free information that covers church finance issues.
A capital campaign is a campaign to raise money, usually done for a specific purpose. The purpose can be anything from building a new building to paying down current debt.
There have historically been two ways to handle a capital campaign:
1) Professionally led capital campaign where the church hires an outside professional company to come to the church and provide the experience and leadership to see the campaign through a successful completion. This method can be expensive but churches may enjoy the high level of service.
2) Church led capital campaign where the pastor expresses to the congregation a specific need for money and asks for pledges to be raised over a period of time. This method does not cost anything but it does not tend to have very good results because the church does not know what to do or the process that needs to take place in order to have a successful campaign.
Recently, a new type of capital campaign has been introduced. It is a hybrid of the two methods above. It teaches the leadership how to run their own professional capital campaign and gives them all of the tools and materials that would be used by a professional capital campaign company. This method is a little more work than just bringing in a professional company to run the capital campaign but it is far less expensive and once you have the knowledge and materials about running a capital campaign you may not ever need to higher someone else to do this again.
Contact us for more information...

Do financial statements have to be prepared by an accountant?

Do financial statements have to be prepared by an accountant?
We often hear from churches that they have been told by a bank that they have to submit accountant prepared and even audited financial statements in order for the loan to even be reviewed. Having financial statements prepared by an accountant is time consuming and expensive and frustrating if the lender ends up saying no for something that they could have determined by reviewing the church loan request with internally prepared financial statements.

Generally, if a lender is telling you that your statements have to be prepared by an accountant for them to even look at the loan this is a pretty good sign they do not close a lot of church loans and probably are looking for a polite reason to turn you away.

We take a different approach; we will review your financial statements and tell you how much your church will qualify to borrow. If the statements will not be accepted by underwriting you will be able to determine if it is worth moving forward at that point based on whether we believe we can provide the financing or not. In many cases we do not need financials statements to be prepared by an accountant. If the church is well organized and their financial statements are in order we can generally use internally prepared statements, saving the church time and money.

Bond or Loan? Which should you choose?

                                                                                     

 Should your Church get a Bond or a Church Loan?

When looking to finance a church there are primarily two options available to churches, Church Bonds and Church Loans. This blog will discuss the differences between the two. Most Church Bonds have long term fixed interest rates and are used for the same purposes as a church loan such as purchasing real estate, refinancing a property, building a sanctuary, and renovating a property. Church Bonds generally have a fixed interest rate with no balloon and range in length from 15 years to 30 years. Most Church Bonds do not require personal guarantees.

Before you get all excited and call one of our church loan Analysts about one of our Bond programs you need to understand how this differs from our church loan programs.

Although Bonds have long term fixed interest rates, the fees are much higher. The reason that fees are higher on a bond program is that you have to pay to have the bond underwritten and then you have to pay to have the bonds sold to investors. It is not uncommon for a church to pay upwards of 10% in fees to complete a bond transaction. To make matters worse, most bond companies do not offer guaranteed placement, meaning that it is possible you will incur the fees and they will not sell the bonds or they will come back to the church and ask the church members to purchase the bonds.

If a church has had credit issues or needs creative financing then a bond program may be the only fit but in most cases a church loan is going to be less expensive and quicker to close.

Church Bond paperwork versus church loan paperwork:
A Church Bond tends to have much more stringent guidelines because the bonds are sold to investors. Audited financials and lengthy paperwork are a necessity with this loan. Because of the paperwork and the fact that the Bonds must be sold to investors a bond transaction can take as much as 2 or 3 times longer than a church loan.

In Summary:
In almost all occasions a church loan is better than a Church Bond. church loans generally have fewer fees; have excellent rates and terms and can be closed in a fraction of the time it takes to do a bond offering.
Please call our offices and speak with one of our church loan Analysts to learn more about options available to your church: (718) 857-2067

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.