Church Lending Process
Whether you have prior experience with a lender or if this is your first experience, every encounter may not be the same, thus knowing some generalities about what to expect is beneficial. The following process is designed to help you understand some common practices and expectations utilized throughout the lending process.
Initial Meeting ~We will seek to acquire a portrait of your ministry needs to guide you towards your goals. In order to accomplish your goal, the following information is required:
- Description of your ministry
- Current weekly attendance
- Average weekly or annual tithes and offerings
- Estimated property values
- Current debt load
- Capital Campaign
- Goals and purpose for the loan
Documentation & Financials ~Throughout the lending process, you will need to provide various documents and financials. The most common items requested include:
- Three years of financial statements prepared in accordance with generally accepted accounting principles (GAAP)
- Current year-to-date financial statements
- Current market appraisal of your property
- Corporate resolution authorizing the loan amount and authorized signatures to sign the loan
- Copy of current constitution and bylaws
- Title search to be sure there are no liens or encumbrances
- Survey of the property
Application Process ~After the required documents have been collected, the application process can begin. JTB Business Advisors, LLC will escort you through the application process to ensure that all items are accurately prepared to be submitted for underwriting approval. This process can take up to 4 months. Upon approval, you should receive a letter detailing the final loan amount, and the terms, and conditions of the loan. Once you have endorsed the letter of acceptance, your loan will be scheduled for closing.
Concerns ~Some lenders may identify all your income as a potential debt repayment source. This is dangerous, as it could compromise your financial commitments to various ministries and missions. It is wise to look at the big picture. A good lender will not simply talk about how much you can borrow, but rather how much you should borrow. They will also discuss other possible funding options that may be a good fit for your ministry needs. In other words, the lender discusses a financing strategy rather than just a loan. A strategy may include some type of capital campaign to help fund the project which minimizes the loan amount, and involves your congregation in the process. JTB Business Advisors, LLC is equipped to guide you through this process as well as to provide additional consulting as requested.
Choose a Lender ~When searching for a lender, seek one whose confidence you have gained and who understands the uniqueness of you church finances, budgets, and ministry at large.