The procedure for applying for church loans is the same as any other unsecured loan, but we can simplify it by breaking it down into five basic requirements:
Church Documentation
Start with your pastor and go to the finance committee. They will put together all of the documentation you need to apply for a church loan. If there is anyone in your church family who has gone through this process before, ask them for help to ensure that you have everything you need.
Financials and Business Plan
Next, take this information and develop a financial plan and cash flow projection (earnestly praying over these). Finally, ensure that your church’s leadership approves your business/expansion plan and fully endorses your loan request.
Personal Financials
Ensure that you take care of your finances before applying for a church loan, so there are no surprises during the underwriting process. If you have any bad credit, fix it or use someone who has good credit to co-sign with you. These are standard operating procedures in the lending world. You must qualify on both fronts — business and person (the same as purchasing a car).
Underwrite/Appraisal
After all, documentation is submitted. An underwriter will conduct research into your financials and verify all the information you provided through traditional methods like website research, etc., or by talking to your accountant or banker if they are known/trusted enough. Then, if your application is approved, the underwriter will refer it to an appraiser who will conduct a physical inspection of any existing or planned property and/or equipment and/or fixtures that will be mortgaged (if applicable) to assess value and determine terms for the financing.
Funding
If everything checks out with the underwriter and the appraisal comes back adequate, you get funded! Congratulations! If additional items need work or items that the underwriter or appraiser missed, they must be corrected before funding can occur. This process takes anywhere from one business day to several weeks, depending on how quickly all parties involved can respond. You should know going into it, so it doesn’t come as a surprise or cause undue stress.
Payment and Interest
A church loans is an unsecured loan, just like a personal loan, requiring monthly payments. Loan terms are negotiable depending on the health of your business and/or project and can range from 6 months to 5 years. The interest rate is also negotiable and should reflect what you would expect to take out this type of financing outside of the church.
