A Checklist for Church Loan Requests: Documentation You Need | Church Realty

A Checklist For Church Loan Requests: Documentation You Need

By | Financing Resources

Use this checklist below as a guide to help gather and organize the documentation needed for your church loan request.


  • YTD Income and Expense Statement (also referred to as a P&L)
  • Budget Comparison (projected budget as compared to actuals)
  • Balance Sheet
  • Bank Statements and/or Quarterly Statements that verify cash and investments


  • Income and Expense Statements (also referred to as P&L Statements)
  • Budget Comparisons
  • Balance Sheets


  • Original loan amount(s) vs. current loan amounts
  •  Interest Rate(s)
  • Origination and maturity date(s)


  • Description of what are you trying to accomplish?  When?  Why?
  • How much money are you looking to borrow?
  • Project Information (construction documents, contractor information, budget, target purchase area, etc…)


  • YTD average attendance trends (by program, by age)
  • Previous three years attendance trends (by program, by age)
  • Membership numbers (by age and/or family units)
  • Giving Units
  • Total annual giving of your top 15 Donors – listed individually (no names)
  • Community demographics (if available)


  • Articles of Incorporation
  • Constitution
  • By-Laws
  • Brief church history
  • Explanation of other entities you are formally affiliated with
  • Leadership bios
Church Real Estate Loan Evaluations: It's Not Just About the Numbers | Church Realty

Church Real Estate Loan Evaluations: It’s Not Just About The Numbers

By | Financing Resources

The church real estate loan evaluation process goes deeper than evaluating your financial information. Believe it or not, lenders are also evaluating you — the person or church asking them for money. They are looking to make sure you have a firm grasp of what’s going on within your organization and that your organizational needs warrant needing a loan.

Here are four “non-financial” areas a lender is evaluating 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 taking place within your church community?

Below, we dive into each of these areas in greater detail.


Being able to demonstrate sound bookkeeping practices is vital. Lenders want to see a consistent discipline of accurate accounting. This is demonstrated by money management policies, bookkeeping systems, and the people involved in overseeing the finances.

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


Lenders rely on your financial history and growth trends as a primary reference to understand your financial capacity moving forward. Because of this, one of the most practical things your church can do is start acting like you are paying the mortgage or lease payment that you desire.  

What does that mean?  

Let’s say your current lease payment is $4,000/month, and you anticipate moving into a loan or lease arrangement that would require a $10,000/month 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 will show a potential lender or landlord that you have the capacity to make a $10,000/month payment. An additional benefit will be the additional money you accumulate over several months.


It’s unfortunate, but fraud is a reality in many churches and religious organizations. While there is no way to stop someone who 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 precise method for managing the day-to-day operations. They will also want to see a clearly defined process for making significant strategic decisions and monitoring financial activity within your organization.


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

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

  • What is your mission? What are you ultimately about?
  • What is your strategy? How do you go about accomplishing your mission?
  • How does the project you are requesting funding to facilitate your strategy?
  • What is the geographic and demographic breakdown of your membership?
  • What are your giving trends for
    • general giving?
    • designated giving?
    • building or facilities-related giving?
  • How will your project benefit the local community?

Contact Us for Church Real Estate Help

As stated above, a lender’s evaluation will go beyond merely crunching numbers to see if you fit into a particular box. Your ability to communicate these more qualitative areas with confidence and accuracy is an integral part of the lending approval process. Do your best to prepare in each of these areas before meeting with your lender. 

If you need help buying a church or selling an existing building, or want experienced advice from real estate professionals, contact us online or call us at our Plano office at 972-424-2000, or in Houston at 281-540-2008.

Church Loans: Comparing Bank Financing to Bond Financing

By | Financing Resources

Banks tend to be the “go-to” option for church loans and school loans. This is probably due to the familiarity people have with banks; after all, people drive past banks everywhere they go. It’s not too often, however, that they run across bond underwriting companies and investment banks on the way to and from work. This lack of familiarity often causes organizations to overlook bond financing as a viable option.

The purpose of this article is to help you better understand some of the critical differences between funding your project with a bank loan versus a bond offering.

Church Loans: Comparing Bank Financing to Bond Financing | Church Realty

There are four significant differences between bank and bond financing.

  • Fee Structure
  • Establishing Interest Rates
  • General Terms
  • Time Needed to Fund

Fee Structure

Banks make interest (i.e., profit) over the life of a loan and are not as dependent upon the upfront fees for their business model to work. It’s also important to note the costs associated with closing the church loans must be paid upfront with cash on hand.

Bond companies, on the other hand, do not hold loans on their books. The bonds that are issued are purchased by individual or institutional investors. Those investors are the ones that make money on the interest earned from the bond. Because of this, bond companies and investment banks make a profit by charging upfront fees to help structure and issue the bond offerings.

Bond fees are primarily influenced by the way the bonds are offered for sale. There are three basic options.

Option 1 – Sell the bonds internally (to church members, for example)

Option 2 – Sell the bonds to outside investors

Option 3 – Some combination of Options 1 and 2

Selling the bonds internally tends to be a less expensive option. Many churches do not prefer this approach, so they direct the bond broker to sell to outside investors while making bonds available to members who may be interested in investing in them.

Unlike bank fees, a bond structure will often allow fees to be reimbursed as part of the bond offering. This allows the church to finance the fees along with the rest of the project over the life of the bonds.

Establishing Interest Rates

When it comes to establishing interest rates, the biggest difference between bank loans and bond offerings has to do with who sets the interest rate. In a bank loan, the bank determines the rate. In a bond offering, the issuer determines the rate.

As you can imagine, there is a lot that goes into establishing what an interest rate should be in either case. Interest rates established by a bank are influenced by things like cost of funds, health and condition of their overall portfolio, and their general appetite for lending to ministries and schools.  

Establishing an interest rate for a bond offering can be as simple as asking the following question.

What does the interest rate need to be to attract investors?

Of course, the type of bond issued has an impact on the rate as well. For example, taxable bonds tend to pay a higher yield than tax-exempt bonds. Even though it is possible for a church to issue tax-exempt bonds, there are additional restrictions on this type of bond offering.

General Terms

Banks seldom, if ever, issue an actual 25-year loan commitment. Even though payments can be amortized over 25 years, the terms require clients to go through a formal re-qualification and renewal process every five to seven years. This often results in additional fees and a potentially higher interest rate. What may look like a 20-25 year loan on paper is no more than a five to a seven-year commitment that can potentially be extended.

With a bond offering, interest rates are established and fixed for the entire term of the loan. When the economy is such that interest rates are low, a bond structure could be an excellent option to help protect against the risk associated with potentially rising interest rates that are associated with bank loans.

Time Needed to Fund

Whereas a typical bank loan can be funded within 60 days of application, a bond offering can take several months. Banks use their available capital to fund loan requests. Bond financing must account for the time needed to sell the bonds. This process takes more time.

The Right Choice for Your Church Loans

Working with a bond company is different than working with a bank. Each has a way to evaluate potential clients. Each company has a unique process that clients must follow to receive the funds once approved.  

In the end, there is no one size fits all approach to church loans. Our biggest goal at Church Realty is to help you understand all the options available to you, so you can decide what makes the most sense for your project and needs.

Would you like to speak with someone about your financing options? If so, complete the form linked here, and we will be in contact with you soon.


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