Whenever you contemplate taking a loan, do not rush into anything, especially when you’re new to the game. Keep an open mind and ask all the relevant questions to potential lenders, given that it is a long-term commitment.
It is advisable to practice the following before even considering taking church loans given that the resources at your disposal are limited:
- Assess the rate at which your congregation has grown over the past few years
- Your budget should leave you with sufficient funds to divert for your mission expenses after deducting the loan payment amounts.
- Keep all channels of communication open, especially between you, your lender, and the architect.
- Discuss your plans with your church members as their offerings will help you repay the loan taken.
- Be prepared to cut down on church expenses to accommodate loan payments.
- Focus primarily on your church’s core mission during the entire loan process.
Church mortgage loans greatly facilitate necessary acquisitions, facility expansions, and even improvements of existing church buildings. It is advisable to ask the below listed five questions before you take the plunge:
Can Your Church Afford A Loan?
Take a sharp look at your current finances to assess whether you can sustain a long-term loan. If your monthly church income is more or less inconsistent, you will be on a shaky wicket. Even though a mortgage is a helpful tool, it should not impinge on funds reserved for the growth of your ministry.
You may use church loans towards funding a larger building, yet if you are unable to reach out to many more worshippers, the very purpose stands defeated. A bigger space, after all, is of no consequence without having a sizeable congregation to accommodate within its premises.
Does The Lender Specialize In This Domain?
Churches have unique needs, unlike profit-making ventures. Those agencies used to lending to churches have the spiritual wellbeing of the entity in mind. They do not merely view the deal as a business transaction but genuinely support the church’s ministry and spirit of community service.
Any Flexibility Offered In Payment Terms?
Without the lender perceiving you as a financial risk, make inquiries about the flexibility you can expect in unforeseen eventualities. Get clarity on their policy for late-payments and what support you can expect from them at such times.
What Are The Penalties Involved?
Most often, there are conditions attached to low-interest rates. Some lending institutions even levy a penalty for paying off the loan earlier than expected. Third-party fees are generally a ploy to extract unnecessary money from the borrower. Read between the lines carefully before signing the contract.
Any Additional Services Offered?
Lending institutions that go way beyond funding your project are worth partnering with. Some provide consultation services, refer you to qualified architects, and even manage the disbursement of your funds.
Knowing what questions to ask puts you on the right path, so be conscious of these and proceed when you are satisfied with the answers. Doing so helps to keep the spiritual and financial health of your church intact.
Byron Simpson is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance cent.