Cindy’s Other Blog

For most churches the purchase of a new church building is the largest financial transaction most of the members of the church have ever been involved in. As a result the process is one that can become intimidating to those charged with the responsibility to represent the congregation. It is a serious responsibility that in most cases will determine the location of your church for the next 30 - 40 years.

Let me ask you a question. If you had a problem with your foot, it just hurt all the time, what would you eventually do? You’d probably go to a doctor. Would you go to a dentist? No, why not? Aren’t dentists doctors? Of course they are, but they don’t specialize in feet do they. So, one of the first things I suggest to churches that have made the decision to build or buy an existing church building is to start building a team of church professionals, specialists that understand “CHURCH”, professionals that have been through this process many times. The big advantage is not that the professionals have all the answers, but they have many questions you may never think to ask yourself.

When I meet with the church leadership for the first time I almost always suggest that they get a church friendly lender on board in the very early stages. Here’s why. When you start shopping for land to build on or an existing church building you need to have a good understanding of what you can spend. By getting the banker on your team early you will save yourself a lot of time and put yourself in position to get the deals when they are available.

If you are planning to move in the next 24 - 36 months and you need to sell your current location in order to move, then you really need to put your building on market now. Most churches shy away of this idea because they want to find a building to buy first. But even if you find the perfect building, it will probably be gone by the time you sell your building so you can pay for the new one. Many times churches worry about selling their building and not finding a new one, leaving them homeless, but you can structure an agreement that will protect you from this situation.

Many churches head out to find a building as soon as they first consider a relocation, and then once they have found one try to figure out how they can pay for it. Sellers of both land and buildings usually will not wait long for you to sell your existing church building and arrange a loan. You will be in position to get the best deals if you have all your money in hand, including the equity from your building and any loans you need.

It is important that the lender you work with is one that truly understands church; understands that you don’t make a profit. Most banks are accustomed to dealing with for profit businesses and are clueless on the ways churches work. You are far ahead of the game by working with lenders that have successfully financed churches in the past year. Just like the analogy of the doctor, it’s best to deal with a church friendly lender.

I suggest that you speak with several church friendly lenders to determine with whom you can gain a comfort level that you could work with them. This is a relationship that will be with you for a long time, it’s worth putting in some work to make the right choice.

During the application process you will be asked for all the normal information on your church such as, financial history, attendance records, cash positions, equity etc. The lenders use this information to qualify you for a loan, and this will give you a good idea about how much you borrow. With this number you can shop for church buildings with confidence and find the property that meets you needs and have a good chance to close in a timely manner.

Many lenders will want you to have around 25% - 35% equity in your new building. In order to raise money, many churches will run capital campaign. This is another area that many churches try to take on themselves. Typically when churches do higher a professional to come and manage the campaign the professional campaign will usually raise about 2 - 3 times the amount of the money that an “in house” campaign can raise. It is a good idea to speak with multiple capital campaign companies, and find one that is a good fit.

So, as in all things prayer is crucial, planning every step along the way and the assistance of church professionals, those who have completed several church projects in the past year, is highly recommended. Follow these simple basic steps and you should have a very successful relocation project. In our next article we will discuss some of the financial options available for you to choose from.