Are you a leader at church and are you hearing the following questions?
- Where are we going to put all the kids and teens? We are out of classroom space.
- When are we going to build our first permanent home?
- Can we get started on our dream to build a new sanctuary?
If you are being asked these or similar questions, maybe it’s time to start planning for a new facility. That facility might involve new construction, or it might mean it's time to buy an existing building that can be renovated. Yes, it’s optimal to build without borrowing. However, that is not always feasible in today’s world. How many individuals today buy their first homes with cash? Here are some good indicators that it might be time to think about borrowing for a church expansion project:
- You sense people are ready to start giving to the project. If so, it’s time to contact Christian Investors Financial (CIF) Campaigns to help determine what steps are needed to raise funds for your project. A professionally-run campaign almost always makes more sense than an internally-led campaign. The less debt needed, the better for everyone.
- The church is growing both in attendance and giving. If you’re running out of space since your ministry is healthy and strong, a loan to help meet the needs of your congregation could be a great option.
- The church has an operating surplus and can manage its budget to plan for a new or larger mortgage payment. In a strong scenario, the church can see paying additional principal amounts to pay the debt off quicker than required. The average CIF loan is outstanding less than 10 years while the amortization is typically 25 years.
- The payment plus any other rent the church would pay is less than 25 percent of the church’s total general giving. Any more than this tends to place a significant strain on ministry. Many times, even 25 percent would put too much of a financial burden on a church.
- The church has cash on hand for a 25 percent or more down payment, has pledges that will quickly raise this cash or has significant equity in its current church campus or land.
- The denomination’s leadership is supportive of the church’s leadership and growth efforts.
- Salaries to pastors and staff will not need to be cut in order to make the new debt payment.
- The church has a well-established senior pastor who is excited to lead the church into the future. Other staff is stable and motivated.
- If borrowed before, the church has a solid payment history and relationship with its lender. While many banks lend to churches, they tend to not understand “the reason for the season” as does a denominational lender like CIF.
A few reasons not to borrow include:
- We need the loan to pay salaries.
- If we build it, “they” will come. A healthy church with sound teaching will tend to grow. Churches do not grow just because of buildings.
- A vocal few are ready to get going, but there are not many others interested in contributing to a new project.
- Debt is good for a church, and will challenge us to grow.
- The church is shrinking and we just need to do something.
Contact us to get started.
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