Posts Tagged ‘Debt Relief’

Difficult Church Loan and Business Finance Solutions

September 26th, 2022

As a result, it is common to find that church financing has been obtained only after one or more church members have provided a personal guarantee. The requirement for personal guarantors acts as a severe obstacle because church members might be unwilling to act in this capacity and because there simply might not be individuals who have sufficient net worth to provide a personal guarantee for a large church loan.

(3) Church Financing Difficulty Number Three: When church financing is obtained, there are frequently unacceptable business finance terms such as very small loans, low loan-to-value (LTV) of 50% to 60%, short-term loans and high interest rates. These onerous terms are tantamount to the church loan being declined, and if the terms are accepted, the church is likely to experience continuing financial difficulties due to unrealistic commercial mortgage requirements.

(4) Church Financing Difficulty Number Four: Construction, renovation and land acquisition are even more difficult for churches to finance than purchases or refinancing. As a result, needed repairs are often postponed indefinitely and new churches frequently take many years to become a reality.

Six Practical Church Loan and Commercial Mortgage Solutions -

There are common-sense financing solutions for the church loan issues described above. Here is an overview of church financing that is now available from some non-traditional lenders:

(1) Church Loan Financing Approach Number One: Non-Recourse Loans (instead of guarantors). The willingness to eliminate individual guarantors is likely to require a non-traditional church lender. This particular church financing solution means that lender decisions will not be based on personal guarantors in any way.

(2) Church Loan Solution Number Two: Long-term business loans. Church financing will be much more successful when it is long-term instead of short-term (payments will be reduced dramatically).

(3) Church Loan Solution Number Three: Low interest rates (usually a maximum of prime plus 1%). In reality many churches have been taken advantage of and charged excessive interest rates because lenders perceived that they did not have any other realistic options.

With payments based upon a rate in the range of prime plus 1%, church financing payments will be reduced dramatically. In combination with longer-term loans, the overall payment reduction will make a significant contribution to church cash flow improvements.