Whether you are building or purchasing, there are several types of church financing available. Educate yourself on the choices to make the best decision and get the most for your money. Church construction financing is stressful for all members of the congregation, and those responsible for making the decisions need to educate themselves on all options.

Financing for churches is available through any combination of construction loans, private or public bonds, and capital stewardship campaigns.

1. Construction loans--Church construction loans are available as fixed or adjustable rate, interest only through construction and other options just like in home construction. Loans are available through direct church lenders and your local bank.

2. Bonds--Church bond financing is either through public bonds, which often have a lower interest rate but higher upfront cost than loans, or private bonds, which are bonds sold within the congregation.

3. Stewardship capital campaign--A stewardship capital campaign raises money for the church, reducing the amount borrowed. Once the building program is complete, many churches implement a stewardship capital campaign to more quickly pay off the loan.

Action Steps
The best contacts and resources to help you get it done

Determine how much of monthly income can go to church financing

A rule of thumb in church financing is to pay no more than 35% of the church's monthly income in total debt payments. This includes existing debt in addition to church building financing.

I recommend: If your church is carrying existing debt, it makes sense to pay down existing debt through a stewardship campaign.

Establish a budget for church building financing

Developing plans before you have a clear idea of how much money your church has available is a quick way to go over budget. Work with an experienced architect and be frank about your budget and priorities.

I recommend: Interview several architects until you are comfortable you have found one who understands the unique needs of church construction.

Get your finances in order

Banks require a complete financial package when applying for a loan. Church loans hinge on perceived risk. A professionally prepared financial package gives the lending institution confidence. This package should include financial history from the last three years.

I recommend: A church management program, such as the one developed by CahabaWorks, creates and tracks budgets, contributions and helps organize your finances.

Grow through church bond financing

Specialist church bond financing firms can help your religious institution find the money to accomplish its goals, often under lighter restrictions than required by church loans.

I recommend: Church bond financing firms include Church Bond Investing, Great Nation Investment Corp. and CND Financial.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Early in the planning process visit both direct church lenders and your local bank. Shop around for the best interest rate and terms.
• •  Financing for churches is a competitive business. Choose a bank that does not require personal guarantees on their church loans.
• •  If your church does not have at least 20% of the total money for the project available, consider a capital campaign before applying for a church construction loan.
• •  Small church lenders are often more willing to work with your congregation if you have non traditional loan needs.