Cutting debt

“I’m worried my church might fall behind on its loan payments.”

That’s never a fun situation to find yourself in, but there’s always hope. Here are some suggestions for what to do if your church finds itself in this difficult situation.

First, remember that God is in charge, knows exactly where you are, and has promised to provide for your needs. It can be all too easy when difficulty arises to focus on your circumstances and take your eyes off God (remember Peter when he got out of the boat?). Remember to pray and ask God for direction in your situation.

Second, communicate. When things like this happen, we tend to turn inward and hide rather than turning outward and communicating. Talk with your pastoral and staff leadership, your elders or governing board, other stakeholders, and even the entire congregation.

You should also consider talking to your lender (more on this below). Most lenders only seem big and scary—but they are managed and operated by normal people like you and me. And from experience, I can tell you that we would much rather know of your challenging circumstances than have you miss a payment—or two or three—wondering what is happening, and then contacting you to find out.

Third, create a plan. Maybe the best time to develop a plan would have been before you got in difficulty. But there is a Chinese proverb that says, “The best time to plant a tree was 20 years ago—the next best time is now.”

Things we commonly see from churches we work with include:

  • Telling the congregation that you are having financial challenges and informing them of your plans to get back to financial health.
  • Asking people to give. Churches often hesitate to ask, but there are people in our churches who are generous, blessed, and have the gift of giving. Often, they are just waiting for someone to ask.
  • Looking for places you can adjust your budget. Are there things that can be eliminated, delayed or put off, either for a period of time or indefinitely?
  • Are there things of value that the church owns that could be sold? One ministry we worked with sold some equipment that was no longer being used and raised $8,000 in a single afternoon!
  • Discussing options with your lender:
    • Is refinancing your mortgage possible? This can be difficult in a budget crunch, but if your church has pre-paid principal or has a small loan relative to the property value, this might be an option.
    • Is adjusting your interest rate possible? This can also be difficult in a crunch, but if your rate does not reflect what is available in the marketplace, lenders today are more willing to consider a “modification,” where your rate is changed but the remaining terms and conditions are left intact.
    • Some lenders will offer a period of “interest only” payments, where a church can suspend the normally required monthly principal payment. This can provide additional cash flow to get over a short-term financial “speed bump.”

Times of financial challenge in churches can be difficult. But if you can get your perspective in the right place, pray, communicate, and plan, you will most often find that “time is your friend.”

Given time, most churches can work through financial challenges.

And if we at CIF can help you in any of these areas, please let us know; it would be our delight to serve you.

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