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

What if your Church's loan request is decined?

 When a church receives a decline they are often given very little information as to why they did not qualify. They might hear something like: “Your debt service coverage was below our minimum requirement.” Or “The amount you are looking to borrow is more than your debt service can cover at a comfortable level.” To many people this sounds like garbled nonsense. What you don’t generally hear is what you need to do to be approved.

Ask specific questions about what the church can do to qualify for the loan. An analyst should be able to tell you how far the church is from being approved for the requested loan amount. You also want to know how much money the church can qualify for today. Some analysts are unwilling or unable to answer these questions because they do not know how to underwrite a church loan; they simply take your information and pass it off to an analyst that does the work.

Often times you will hear from an analyst that you simply need to increase your income by X to qualify for the loan. Increasing income can often times be more difficult than decreasing expenses. So it is better to express things in relative terms: “Your church needs to have about $50,000 to service the proposed new debt payment.” In this example, the church can decide if it wants to decrease expenses to make up the shortfall, increase income, or some combination of the two.

I will give you the kind of advice you need to understand exactly where your church is and what needs to be done to get the loan approved. My consultation is free and without obligation.

Even if your bank said no, we still want to look at your loan. Many times we can be more aggressive than a traditional bank and provide you a higher loan amount at better terms than they would have offered. 

So if you or someone you know is looking for a church loan, please contact me today. Don’t forget to ask about our referral program: