Fortunately, when it comes to ways to fund your church building project, there are options. Borrowing from a financial institution is a common choice, and we’ve covered that in multiple ways. We also touched on one non-traditional alternative, which is borrowing from a denominational lender. Here’s more on that option, and suggestions of other alternatives, as well.
Church Building Funding through Denominational Lenders
If your church is affiliated, you can often access funding opportunities through Christian denominational lenders. One upside of this option is that they will understand your church vision for ministry and what you’re hoping to do with your new church building or remodeling project. Often these organizations do not have to stick to the appraisal like a bank would. This translates to them being able to lend more than a bank should you receive a low appraisal.
Sometimes the denominational authority will also have additional money allocated for mission opportunities that you can use to fund your church design or building project, above and beyond what a normal bank would do for you. The downside with denominational lending is that many times their interest rate can be a little higher than a traditional commercial lender.
The Self-Funding Option for Church Design and Construction
Another option is to self-fund at least some portion of your church building. Commonly, this means partnering with an organization that brings together individuals to invest in your project for a financial return. In other words, you are inviting people to give you money and agreeing to give them back their money, plus a percentage, over a set period of time.
With this option, you set the terms, such as interest rate and repayment timing. As with a bank, you get the money up front to complete your church design and construct your church building. Of course, you still have to make sure money will be coming in to pay those people back over time.
Caveats about Self-Funding
We typically see self-funding as a way that church leaders finance smaller projects, up to several hundred thousand dollars, rather than a full church building project costing $1 million or more.
With self-funding, you also don’t have to work with an organization; you can create an organization to handle this process yourself. However, it makes you responsible for all the paperwork that involves: tax returns, reporting, payments, etc. So, it’s important to make certain, if you choose this option, that you’ve got the necessary skills in your church membership and/or leadership to handle these important details.
The good news is that there are multiple ways to get people on board with your church building project. Getting them excited about the new church design or remodeling options is just the start. You need people to make a commitment, a promise to fund your church building project, and that’s where the capital campaign comes in. We’ll explore this step in more depth in our next post, but it’s important to state up front that working with a professional organization to help you run your campaign will increase your chances of success, especially since the campaign process is constantly changing.
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