Religious Institution Financing

Seven Requests for Church Financing are being pre-underwritten in our office; refinancing and new purchases.

The only thing that comes to my mind why we have so many requests for Church financing is that during economic crisis people are turning more to religion, they are trying to get back to the basics, and there is no better way than visiting your Place of Worship.

Can we finance your Church, Synagogue, Mosque etc.? Well it depends. Tonight’s blog will deal with the financing of these non-profit organizations. Most non-profits are deemed that way for tax purposes and as such are known as 501 C-3’s. There are other IRS code numbers as well depending on the type of non-profit but for our discussion tonight just be aware that they are known as 501 C-3’s.

So the question begs of itself how can a non-profit get financed? First of all the financing for this type of organization will be completely different than a financing for a profit organization. The documentation for a Church loan is very different because the Church or affiliated organization does not want to show a profit. If they show a profit they can theoretically lose their non-profit status.

So if you understand this at the outset you have a leg up on your competition that may be going after the same client. The key to the smooth financing is to understand how a Church, Synagogue, or other religious organization gets their capital to run their daily operations. By understanding the source of their monies you can structure a loan to meet their fiscal needs. Most organizations meet their fiscal obligations through donations. If you can document the donations, see the trend in the donation and be able to extrapolate future “earnings”, a case can be made for the loan, because this is the source of repayment for any future debt.

Also, projections are also going to be questioned and looked at very carefully for a new or an existing institution. I recommended today to one of our clients to establish a restricted account for the building /capital contribution account. Lenders want to see that for a new purchase that there is this type of fund established and that they have been funded with congregant’s donations. By restricting the account, the board of the Religious institution cannot use these funds for other than what they were restricted to – in our example the purchase of a new building.

The other major point to remember is that there are a limited amount of lenders that specialize in this particular area. The reason is that NO ONE WANTS TO FORECLOSE AGAINST GOD; this thought must never be forgotten when dealing in this arena.

For more on Church and Synagogue loans visit loanforbiz.com. Get FREE commercial loan training with the purchase of our book GET Your Loan Closed!, buy yours today at http://www.getyourloanclosed.com.