Church financing and lending is simply another niche area in the lending arena. Some companies have even jokingly said, “financing for a higher purpose.” But there is truth in that statement. Churches, much like schools, are given special arrangements and terms that small businesses would not be given.
What is it?
Churches often need to expand existing facilities to make space for new congregation, refinance existing debt to lower bills, acquire land for expansion or finance new construction to build the church itself. Churches usually have the luxury of borrowing lump sums in a conservative way, while the lenders will provide better than average flexibility. Most of the time churches will not need to secure the loan and can borrow based on past, for lack of a better term, credit history. The loans will unusually be 15, 20 and 25 year fully amortized church loans with no balloon payments and low fixed interest rates.
These loans can range anywhere from the low $100,000′s all the way to $5 million or more. Time frames to close the loan range from 14 days to 90 days. Whether your Church is doing new construction, major renovation, purchasing existing facilities, land acquisition or refinancing of existing church loans then this type of financing may be a great option for your facility.
Most of the time, if not all of the time, the only entities that will be approved for this type of financing include:
- Churches (Legal Religions only)
- Some 501(3)(c) Non-Profits
- Some non profits involved directly with Religion
How to get the Loan
The loans are pretty straight forward. Their terms are to be discussed between the church and the lending institution. With these types of loans it is probably better to go with a financing company or bank that operates on a national basis, which will gives them access to a large network of direct church lenders across the country. Many churches might want to also bring on a consultant familiar with this area of lending to find the best terms and agreement.
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