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There is a lot to think about when considering a loan for your church. To help, we’ve put together a three-part series on the important questions to ask when considering a church loan. In Part 1, we laid out the main questions to ask. In this post—Part 2—we will specifically focus on church finance questions. Later, Part 3 will concentrate on church facilities questions.

Part 2 – Church Finance Questions
  1. Can your church afford a loan down payment? A church will need a 25% down payment for a loan. This amount can come from either cash on hand from a capital campaign or other sources, or equity in its current church campus. If this amount is available, then a church is in a good position to pay for a loan down payment.
  2. Can your church afford a monthly loan payment? Having an operating surplus and managed budget is a great indicator that a church is able to pay for a new or larger mortgage payment. Ideally, the church can pay additional amounts to removing debt faster. The average CIF loan is paid off in less than 10 years, while the amortization is typically 25 years. Another important element is ensuring pastors’ and staff salaries wouldn’t be cut in order to pay a new monthly debt payment. 
  3. What percentage of total giving should the monthly loan payment be for a church? At today’s historically low-interest rates, the monthly loan payment is usually no more than 25% of the church’s total general giving. Any more than this tends to place a significant strain on ministry. Often even 25% can put too much of a financial burden on a church.
  4. Are you planning a capital campaign to pay back the debt faster? A professionally-run capital campaign helps determine what steps are needed to raise pledges for your project. This is a great option to dramatically help cut down on the church debt. Interested but not sure where to start? We provide capital campaign services and the tools you need to raise money for your church.

To read stories of churches that have partnered with CIF on a church loan, church refinancing or on other church financing needs, click here!

Check out Part 3 of this series where we address questions on church facilities.

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