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.