How Lending Institutions Account for Your Church Building Capital Campaign

How Lending Institutions Account for Your Church Building Capital Campaign

The church design and building process can sometimes seem like a jigsaw puzzle. Different elements will fit together in order for the entire picture to be finished. Here we take a look at how the capital campaign and lending institution pieces combine as part of the broader church design.

What to Expect from Your Lending Institution

If you’re planning to take out a loan to cover some portion of your church building project (and most churches do), the lending institution will want a lot of information that helps them calculate how much you can afford to pay back over the life of the loan. This includes information about the results of your capital campaign.

For example, lending institutions won’t count 100% of the pledges that you received through your capital campaign. They presume a certain amount of attrition (pledgers do move away and their life circumstances change). However, any cash donations that you’ve already received toward the church building project can be figured into the calculations, raising the total amount of money the institution might be willing to lend.

If your church has no recent record or prior history of a significant successful capital campaign, the amount considered by the lender will be much less, perhaps 50% of the unpaid pledges you’ve received. Obviously, if you have a history of collecting high amounts through a capital campaign, that percentage may go up, but don’t expect it to hit 100% of the pledged amount.

Making a Good Church Building and Financing Impression on Your Lending Institution

So, how can the amount considered be maximized? One excellent way is to make a good impression on your bank, proving that you’re organized and have your financial house in order. To help do that, here is a list of information you can bring to your first meeting with a loan officer to prove that your church is ready to take on this financial responsibility:

  • Background on the Church. Write a few paragraphs about your church, including the age of the church, your denomination (or if you’re independent), and your membership information, including historical growth. Include attendance information and its historical growth, the general age of the membership, and the geographical area out of which the church draws its membership.
  • Financial Information. The lending institution will want to see a balance sheet and income statement for the last three years. Bringing this the first time you meet shows that you know how to speak their language. If your giving statements are over four months old and/or you’re meeting in the middle of the year, bring interim financials. Be prepared to talk about giving units, average growth, and average giving per capita, including historical growth.
  • Leadership History. Include information in your package about how your church is governed (board of trustees, elders, or elected church board, etc.) and the tenure, resume, and accomplishments of your pastor.
  • Church Building Project Summary. Go in with a prepared “elevator speech” about your church vision for how this church design will impact growth in the future. Provide a summary of the project and a summary of the project cost, including a budget estimate.

All of this can go a long way toward getting your loan approved, and perhaps proving your church building project is worth an increase in your loan amount. Remember, however, that your conviction concerning God’s will for the church design is not something lenders can “bank” on. Instead, as we noted above, you need to speak their language.

If you’re looking for more information on how all the church building puzzle pieces fit together, sign up for our upcoming free i3 webinars, which give you the latest information on church design and building in America today.

2022-03-01T21:42:56+00:00 March 1st, 2022|Church Building, Church Design|