Although not publicized, most institutional lenders such as banks rarely arrange loans for churches. While this has been the situation for a very long time, it has become the case even more so during the last few years as the overall economy has suffered. Though the bank will not tell you this up front, it will become quite evident as weeks turn into months without a loan approval while all the time the bank continues to request additional information. Eventually they will find a reason they can’t fund the church loan having wasted both your time and energy. Even Christian Credit Unions have cut back, or even stopped, arranging church loans in recent years.

At BDM Mortgage Services our church loans are based primarily on the equity in the church’s real estate. Naturally other items are considered, such as income, but the primary factor is the equity. Normally if there is sufficient equity in the church’s real estate we can arrange the church loan.

What makes BDM Mortgage Services different from institutional lenders is our loans to churches are funded by private party lenders. These lenders can be individuals, pension funds, IRAs and profit sharing trusts. This makes it possible for us to arrange a church loan that a bank either can’t or will choose not to fund. In addition, the process takes weeks, not months.

The few institutional lenders who do on occasion fund loans to churches make the process very time consuming and require significant paperwork from the church perhaps including a resume from the pastor and financial information from the individuals on the Board of Trustees. Some banks may require a personal guarantee from one or more members of the church before it will consider the church loan. Then, should the bank actually fund the church loan, it will likely include a call date in 3, 5 or 7 years even though the actual monthly payments are based on a longer term. This means the church will be faced with a balloon payment down the road which will need to be refinanced with no assurance the bank will perform a second time. Oh, and the interest rate, expect it to adjustable so the church can never really plan on what the future payments on that church loan will be.

We have had churches come to BDM Mortgage Services with an existing loan with a bank which had a five year term, the church had made all 60 monthly payments on time, and yet the bank would not refinance the balloon payment. Even if the bank does refinance the balloon payment, the church is faced with having to refinance their church loan every 3, 5 or 7 years including having to pay the cost involved all over again each and every time.

At BDM Mortgage Services, we can arrange a fully amortized church loan so there will be no balloon payment that needs to be refinanced in the future. It can be a one and done process.

The processing of a church loan with BDM Mortgage Services is very simple. As you will notice from the “Checklist of Items Required to Process a Loan Request”, most of the items can be photocopied from existing material. We don’t require tax returns, profit and loss statements or balance sheets prepared by a CPA. The only financial information we require are photocopies of the church’s last twelve months bank statements, very simple.

We don’t require personal guarantees from any members of the church. We don’t perform credit checks on any of the members and the loan never shows up on any person’s credit report. We don’t require a resume from the pastor. There is no prepayment penalty involved on our church loans and the interest rate is fixed for the term of the loan. There are no surprises down the line regarding the interest rate or the monthly payments as both remain the same throughout the term of the loan.

The reason for a church loan can vary. In addition to refinancing an existing church loan, a church may be considering property improvements such as a new roof, new pews, repaving the parking lot or an addition to the sanctuary. Some churches borrow funds to add a preschool, purchase addition property for more parking spaces or perhaps a parsonage for the pastor.

BDM Mortgage Services has been arranging church loans for over 20 years so we are experienced in the unique characteristic of how a church operates as a nonprofit organization. Should you have any questions regarding our loans for churches, or if you would like to get the process started for your church, give us a call at (800) 439-9551 and we would be delighted to discuss this with you.