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It’s Not All About The Numbers

The loan evaluation process goes deeper than evaluating your financial information. Believe it or not, they are also evaluating you – the person asking them for money. They are looking to make sure you have a healthy grasp of what’s going on within your organization that warrants your needing a loan.


Here are four “non-financial” areas a lender is looking to understand as part of their process.


Integrity – Can they trust the information you are providing?


Capacity – Will the loan help you or hurt you?


Accountability – Do you have the appropriate level of financial oversight and management?


Awareness – Is your request reflective of what’s actually taking place within your organization?

INTEGRITY - Can they trust the information you are providing?


Being able to demonstrate sound bookkeeping practices is vital. Lenders will want to see a consistent discipline of accurate accounting. This is demonstrated in a handful of ways; from the bookkeeping system you use to the people involved in overseeing the finances.


Without these things in place, it will be very difficult to secure the funding you are looking for.


Many of the organizations that reach out to us are looking for guidance in how to implement bookkeeping practices. We have included a sample chart of accounts to reference as you begin the process of developing and implementing a bookkeeping system.


Sample Chart of Accounts

CAPACITY - A complete set of financial statements covering the previous three years


A lender will want to see the financial disciplines you have demonstrated for the previous few years to understand what your ability is to manage the loan you are requesting. The way they do this is to evaluate your financial reports from the previous years.


One of the best, and most practical pieces of advice we can offer is to start acting like you are paying the mortgage or lease you anticipate moving into.


What does that mean?


Let’s say your current lease payment is $4,000/mo and you anticipate moving into a loan or lease arrangement that would require a $10,000/mo payment. To demonstrate your capacity to handle this type of payment you could pay the landlord $4,000 and deposit the remaining $6,000 into a savings account. Doing this for a consistent period of time will show a potential lender or landlord that you have the capacity to make a $10,000/mo payment. An additional benefit will be the additional money you accumulate over several months.

ACCOUNTABILITY - Do you have the appropriate level of financial oversight and management?


It’s unfortunate, but fraud is a reality in many churches and religious organizations. Where there is no way to stop someone that wants to do harm, there are ways of managing the organization that limits the ability for people to take advantage. This is where your governing documents and financial policies and procedures come into play.


A lender will want to have the sense that you have a clear method for managing the day-today operations and that there is a clearly defined process for making significant strategic decisions.

AWARENESS - Is your request reflective of what’s actually taking place within your organization?


Being able to articulate what is actually taking place within your ministry or school will help the lender feel confident in your ability to manage the resources you currently have available.


Here are some areas to consider as you prepare to engage in conversation with a lender:

  • How do you define growth?
  • What systems do you have in place to know if you are growing?
  • How do you define success?
  • How do you now when you are successful?
  • What is your model of ministry? Is your model sustainable? If not, what needs to change?
  • What is the makeup of your staff? Do you have planned transitions that need to be accounted for in the coming years? If so, how are you going to lead through a season of transition?
  • What is the geographic and demographic breakdown of your membership?
  • What are your giving trends for your...
    1. ...general giving?
    2. ...designated giving?
    3. ...building/facilities related giving?

As stated above, a lender’s evaluation will go beyond simply crunching numbers to see if you fit into a certain box. Your ability to communicate these areas with confidence and accuracy is an important part of how they will evaluate your loan request.


Contact us by filling out the form below if you need help formulating a strategy to communicate these areas effectively.