If a loan makes sense for your church, would you qualify?



September 10, 2019

Loans are hard to get. Should your church apply for one?

How do you qualify for a loan and decide if it makes sense.

As a church leader, you know that the question of whether to borrow money isn’t easy to answer. These considerations probably sound familiar:

  • For starters, it’s likely that your leadership team members hold varying views on the topic. Some may even question whether it’s biblical.
  • If you do agree that getting a loan is okay, then there’s the larger question of whether it’s wise to do so. Will it help you pursue your mission? Is it the best use of funds?
  • Finally, if the answer is yes, now is the time to borrow, then comes the challenge of figuring out whether your church qualifies for a loan.

These kinds of questions are best answered with help from people who have experience working through them. With more than 50 years of this kind of experience, ECCU is in a position to be this kind of resource to church leaders. The credit union’s new e-book, Can (and should) your church get a loan?, is the most recent example.

One lesson experience drives home is that wrestling through big questions invariably forces us to address important related issues. This is true when you’re considering a church loan. From the e-book:

If you’re trying to qualify for a loan, your church needs to look like a healthy borrower. It’s not uncommon for churches to make changes to their leadership structure and financial practices to prepare for a loan application. And the reality is, “looking like a healthy borrower” sets you up to be a financially healthy church, even if you’re not looking for a loan. If a lender tells you that your church can’t afford a loan, it’s a good indicator that there’s a larger problem you need to address.

This being true, the e-book starts with the question of whether it’s financially feasible for your church to get a loan now. Better to answer this question before you get too invested in plans to buy a new building, remodel your facility or refinance your loan.  It does so by walking you and your team through these crucial questions:

  • Do loan payments fit into your monthly cash flow?
  • Would a capital campaign help?
  • Does your church have the right leadership?

Lenders require you to answer these questions, and there are no quick answers to them. To get them, you’ll need to dig deeply into your financial management practices and leadership structure. In the end, you’ll know not only whether you qualify for a loan, but more broadly, whether your church is fiscally sound.

After getting a green light on loan qualification is the time to ask whether your church should borrow. To answer this question, the e-book will lead you through another set of questions:

  • What biblical principles should you consider before getting a loan?
  • Are there other ways to accommodate your growth?
  • Would it be financially responsible to get a loan?

Again, these are questions for your leadership team to work through together. The free e-book Can (and should) your church get a loan? will help you get started.

Get your copy here.

Category: Ministry Matters