How to Apply for Church Financing?
Church financing is generally regarded as the hardest mortgage to arrange today. They are also considered to be an integral part of the community, and just like businesses they need to keep their accounts in the positive in order to stay functional. Even though financing a loan for a church should not be a significant problem, considering the fact that they are held in such high regard, there are a few problems that complicated church financing. Let’s look at them in more detail:
A church is a unique piece of property and this makes it difficult for the lender, since they will not be able to deal with the Church in a similar manner as they would with other properties, if the borrower fails to make the loan payments, due to the uniqueness and stature of the property.
Personal Guarantors for Church Loans
Lenders are uncomfortable to provide church financing due to the fact that there is no personal guarantor for a church, since they will not be able to hold anyone accountable for failure to meet the loan payment. Selling the church property is another problem that has been discussed above.
Difficulty in Renovations and Constructions
The renovations and constructions for a church are often complicated and more difficult than traditional properties. This makes it harder for the lenders to provide a suitable loan term for church financing, since some churches take many years to get constructed or renovated.
Coming up with Practical Commercial Church Financing
The list of problems mentioned above when acquiring church financing, should let you know about the potential problems but there are quite a few solutions to solve them as well. Let’s take a look at some of them in more detail:
Non-Recourse Loans (instead of Guarantors)
Traditional lenders tend to hesitate financing a church due to the lack of any real guarantors, but non-recourse loans can help overcome that problem.
Church financing can be more valuable and successful if there are long-term loans (up to 30 years), instead of short-term loans.
Lower Interest Rates
Many churches today have had to pay exorbitant interest rates on their loans, since the lenders have perceived that the church really has no other alternative or realistic option other than them.
However, if church financing has lower interest rates it will help in the payments being made much earlier and it would also improve the cash flow situation of the church as well.
Flexible Terms for Construction and Renovation
Church financing can now include new renovations, constructions, refinancing, and purchase and land acquisition with flexible terms. This will ensure that the church doesn’t take years to become a refurbished or remodeled property.
Church financing is incredibly hard to manage and there are few lenders out there who are willing to provide suitable lending options to the borrowers. If you are looking to borrow for a church loan then you should first look at the list of possible loan problems that you will be faced with before going down that road.