Church Financing – Still a Tough Market

Churches continue to have difficulty getting the financing they need for buildling or relocation. We have seen any number of churches that should be able to get financed turned down by lender after lender. Many churches that are getting turned down for financing today could have been financed a year ago with exactly the same financial statements. The biggest impediment to financing is inadequate cash flow – not enough money left after expenses to service a mortgage. Unlike previous years, lenders are not willing to wager that the church will reduce discretionary expenses to service a mortgage or increase income because of growth. Today, lenders want to see 6-12 monts of financial history showing a cash surplus sufficient to cover a mortgage.

Many churches are qualifying for loans, they’re just qualifying for significantly less than last year, and less than they need for the church plans they have. For churches that cannot qualify for as as large of a loan as they need in order to build, they need to raise the difference in cash.
There are three things that a church can do to improve cash flow. The church needs to apply a sharp knife and cut expenses, it needs to faithfully preach and teach about giving and stewardship, and it needs to run a capital campaign (which will also help with coming up with the cash difference between what they need and what they can borrow).
Cutting expenses is difficult, but a necessity for many who want to build. Trimming expenses and increasing income and cash on hand through a capital campaign is the financial answer to many of today’s church financing problems.

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