Every day, I talk to church leaders who are looking for additional financial support. They’ve grown frustrated with their current loan (or lack thereof).
All too often, the conversation becomes an explanation of why a bank isn’t likely to be interested in a project or loan and then a few basic changes to consider for putting the church in a better financial situation.
Union Bank & Trust’s church financing area lends throughout the United States, with a strong focus on the Central and Midwest parts of the country, so I’ve worked with many different denominations and in cities with varying economic circumstances. In the spirit of total candor, I want to share that there’s always a common thread among church loans that are successfully approved: preparation.
My first recommendation is to have an accountant do a full review of your finances before you make your request for financing. Any church with an annual giving budget of more than $350,000 per year should consider getting a professional involved on an annual basis. If nothing else, an accountant can compile your financials into a format that will be more easily presented in a loan request.
Preparation is key
The truth is, it’s easier to be prepared if you have a better understanding of what your bank is weighing in its decision. Between documentation of articles and bylaws, a comprehensive church history, an outline of leadership, vision and mission statement, and a detailed account of your fundraising campaigns, you’ll want to provide your financial institution with an organized and accurate portrayal of your church that extends far beyond the financials.
When it comes to the financials, no matter what bank or financial institution you work with, they will want to see your church’s financial history. If you have to ask them to decipher your system, it can limit the number of financial institutions willing to consider your request. Personally, I love to get the financials from a new church, but it can often take multiple conversations to ensure I’m giving the church a fair look because the financials are difficult to interpret.
My first recommendation is to have an accountant do a full review of your finances before you make your request for financing. Any church with an annual giving budget of more than $350,000 per year should consider getting a professional involved on an annual basis. If nothing else, an accountant can compile your financials into a format that will be more easily presented in a loan request. Presenting finances that have an accountant’s credibility behind them will give you a tremendous boost in the eyes of your lender.
Talk early and often
The earlier you speak with a lender, the better off you are. You’ll want to choose people who understand church lending and want to work with your organization. It’s best for your church to be prepared to present your financial information to your congregation as well as to potential donors and lenders to get your project fully funded.
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It might be wise to engage a professional with the right skills to prepare you for this next financial step — someone who’s going to make certain your project is financially viable, can speak to the bank on your behalf, and will have your church’s best interests in mind as they’re negotiating loan terms.
This is not a mortgage broker, but a true financial consultant who helps balance the needs of the church with the operational and financial demands of a major project. This consultant should be willing to work closely throughout the entire project with the rest of your professional team. This means the architect, your general contractor, your capital campaign manager, and your financial consultant/lender are all on the same page, all the way to completion.
With preparation, prayer, and all the right players, your church’s vision can become reality.
Charity Kuehn has been a banking professional for 25 years and has worked exclusively with churches on their financial needs for the past 11 years. Visit the UBT website for more information.