A church relies heavily on the donations received from its members to sustain itself. These monetary resources are limited and, if not managed well, can result in a financial crisis. For the church to cover its fixed operating costs, support ministry programs, and proceed with expansion plans, continuous funding is necessary.
Church financing is a feasible alternative to meet the significant financial needs of this place of worship. Without adequate financial resources, it becomes challenging for the church to serve its community in a manner it desires. Developing funding strategies with a holistic approach enables the church to fulfill its ministry and positively impact the congregation’s morale.
Financial assistance by way of a church loan helps authorities to raise funds for:
- Acquiring land to build a church
- Purchasing a readymade structure and converting it into a religious center
- Making expansion plans a reality
- Carrying out renovations on your existing property
- Actively undertaking outreach programs
Approaching lenders for funds to finance the plans you have for your ministry facilitates growth. Always use the borrowing tool wisely and effectively to avoid pulling the church into a cycle of debt. The amount you can pay back without cutting corners like compromising on ministry initiatives or staff salaries determines your borrowing capacity.
Analyze and take charge of the finances at your disposal before deciding on availing the church financing route:
- Assess the cash you have in hand to reduce the amount you plan to borrow. Cutting down on your non-essential expenses helps divert more funds into your savings.
- Calculate the finances you can afford to borrow and pay up with ease. Ideally, your mortgage payment should be within 33% of your undesignated earnings.
Looking towards professional financers takes care of your financial needs provided you secure your ministry’s future by adopting the right practices. Lenders view those churches as healthy financing candidates when they meet the following five requisites:
The integrity and capability of the church’s leaders, its governing body, and the quality of church records maintained, including accounting books, are all decisive factors. As church representatives, your honest actions project to your lending institution, your intent to honor the terms of the signed debt agreement.
The church’s well documented financial history is an indicator of its cash flow. When the records reflect stable finances, the lender gains confidence knowing that the church can honor debt obligations in time.
Maintaining substantial operating cash reserves, especially for a church that intends to take a long-term mortgage debt, is a healthy practice. This ensures the church does not face a financial crunch while paying off its loan.
Against the loan given, the church’s real estate serves as a security for mortgage lenders in the event of non-payment. Only when the market value of this church asset exceeds the debt amount can it truly serve its purpose.
Proactive Contingency Plan
A proactive step could be a simple list that outlines the expenses to be cut should an unforeseen development adversely impact the church’s revenue. Such a contingency plan enables the church to adapt with ease.
Make the wise move of embracing viable and structured options like financing that generate resources to keep the church moving forward.