Writing a killer loan request
for your church project
D
eveloping a comprehensive project funding strategy that
aligns with the budget is crucial for a worship facility
expansion / relocation to be realized and should be
formulated prior to completing Construction Documents.
Funding sources include a combination of:
• Cash on hand or from operations
• Proceeds from sale of excess assets
• Gifts through a capital fundraising campaign
• Debt
Most churches must use some amount of indebtedness to realize their
vision for the expanded or new facility. Superior lending offers will be
received by preparing a single Loan Request Package to solicit multiple
lenders rather than submitting separate loan applications to individual
lending institutions. Most lenders require the same basic information. By
packaging all the information together in a single Loan Request, churches
get to tell your own story in your words rather than relying on a non-
related banker to figure it out.
Loan Requests, at a minimum, should include:
• Amount and terms being requested
• Demonstrated Strategic Planning for the project
• Details about the project and how it will positively affect the church’s
ability to repay
• Story of the church and its leadership
• Financials and some limited analysis regarding debt service coverage
• Capital campaign details
• Legal documents
• Project plans
The overall concept of a Loan Request is to make the lender confident
of the church’s ability and dedication to making timely payments. Tell
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CHURCH EXECUTIVE • C H U R C H D E S I G N T R E N D S
your story in your words! Present a well-organized and sophisticated
financial management team by providing a detailed Loan Request with
everything the lender needs to make its decision and underwrite the
loan. Describe past experiences about how the church has grown in both
attendance and revenue. If prior loans have been made and paid early, be
sure to tell the story.
The crucial element to a well-prepared Loan Request is connecting
the project to the church’s vision and how its completion will further
enable repayment of the indebtedness. Include stories of impact in the
community and how the new / expanded facility will enable attendance
growth that will allow the church to have even greater influence.
Some church leaders might rationalize not needing to seek out lending
offers because of a strong relationship with the local bank. This is short-
sighted. Repayment terms, even those offered by your local bank, will be
better if lenders are competing. Also, banks sometimes withdraw loan
commitments before construction begins for technicalities—usually
meaning constricted underwriting guidelines or deciding it does not want
the exposure. Further, lenders have a variety of restrictive loan covenants
that might not be revealed until time to close the loan. Having multiple
offers from which to choose allows the church much greater leverage in
negotiating terms.
Lending options for churches have increased over the last few years as
the market has realized that most churches repay their loans with great
consistency. Lenders include national banks, local banks, denominational
lenders (several lend to churches outside their denomination) and private
funds. There are a number of firms providing bond financing as well.
Each type of lender has pros and cons. Some offer lower interest rates
while others offer full-payout loans or less-restrictive loan covenants.
Receiving offers from each type of lender will allow the church flexibility
to meet its particular needs.
Goff Companies has assisted many churches to prepare effective Project Loan
Request Packages that have resulted in excellent lending terms.
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