Church Loan Plan Workbook

Today's Lenders Are "Different"

(Download for Church Loan Plan Workbook is located at the bottom of this page)

There have been many changes in banking rules over the past few years. In addition, the industry has consolidated more and more in Texas taking the “local” relationships into a more faraway dimension.

You will need to think through the possibilities that are available to you and prepare “PACKAGES” of information for each possible lender.

Local Banks or Branches of Area Banks should have the most to gain from making a loan to a church. Some banks even have a “relationship” program where they will tie your church member’s accounts to your church to give you credit for all the relationships at their bank. This pushes them to take better care of your needs and you should urge your members to move accounts there for more credit. Again, knowledge of what local families support your church comes to the bankers mind as they are thinking through a decision. The more local they are, the more they will know about your membership/their customers and the more this factor will mean.

Local Branches of Nationwide Banks have more ability to provide sophisticated services and have no limit on the loan amount but the have much less “relationship” knowledge than local banks or branches of area banks. The loan decision will be made “up the line” where relationships are not as significant. Some of them claim to have a “special church loan program” so check them out too.

A Denominational Credit Union’s purpose is to help the churches of their denomination grow, build and reach out in missions for the Kingdom of God. You may find the best rates and terms at your denominational credit union though the amount of loan available may be more limited. BCU (Baptist Credit Union) is just such a credit union as it supports the efforts of all members of Texas Baptist (f.k.a. Baptist General Convention of Texas) and the Southern Baptist Convention of Texas. And, churches that are members of CFAA (Christian Financial Association in America) can work through BCU even if they are Anglican, Presbyterian, Assembly of God, Nazarene, Pentecostal or an Independent Bible Church because they have joined with CFAA to promote the stewardship principles found in God’s Word among their members.

Church Bonds are also a possibility as the “bond market” has made a place for them. The minimum size of an issue needs to be in the $1.5 to $2 million area just to spread the up front issuance cost out to make it less insignificant as a part of the interest rate. Such bonds are sold by your church to your members, their families and friends, local investors and then the rest will be placed by the bond issuing company with investors it has dealt with over years who “like” church bond investments. The bonds have to be issued under special rules of the State of Texas for public financing just like cities, counties and other jurisdictions and corporate bonds. Bond issues are complicated, but that is what the bond issuer will cover for their up-front fee. Rates will mirror the current rate markets, usually with lower rates on short term, medium rates on medium term periods and higher rates on the longer term. There should be no pre-payment penalty so, if you can pay “extra” over and above the maturities due, it would go to the longest term bonds to pay the highest rates off as soon as possible. Your denominational credit union usually has relationships with bond issuers and your bank may as well. BCU can certainly help you meet dealers with whom we have had experience.

Click the attachment to download the Church Loan Plan Workbook