Screening Lenders: The Crucial Questions
by David Van Winkle, Vice President ECCU
Your church is growing, and you see God’s blessings throughout your ministry. You’re seeing more lives touched week by week as your church fulfills its God-given mission. Now you need more room to accommodate more ministry to more people.
So you begin the process of building or expanding your facility. Or perhaps you plan to purchase existing property. You assemble a planning team, make announcements to your congregation, and begin a capital campaign. You want to complete this project with integrity. As you plan, you realize that, while your congregation is fully behind the building or purchase, you’ll have to finance part of the project.
How do you find the right lender? What crucial questions should you ask to determine which lender will be a help, not a hindrance, to your project?
Be Prepared
First, it’s important to know that there is no single set of questions for all churches. Each church has its individual needs. Before you begin to interview lenders, you need to determine:
- Where you are in your growth cycle. Are you growing from 250 to 500 attendees, or from 1000 to 2000? Some lenders will not do smaller loans; others stay away from larger ones. You want to find a lender that can at least help with your current need and ideally with the next step in your church’s growth.
- Your short- and long-term goals. Is this project taking you only to the next phase in your ministry, or are you planning for enough capacity for five or ten years from now?
Second, as you interview prospective lenders, you’ll want to be asking yourself whether you will be able to relate with them personally (are the key contacts people with whom you will enjoy working), organizationally (does the organization resonate with your mission), and transactionally (does the organization have lending and investing products that will allow you to complete your project within cost and time constraints).
Finally, you need to be prepared to ask the hard questions that will help you determine which lenders you shouldn’t be working with. For some churches, it may be that the lender doesn’t provide the right mix of products. For others, the financial institution’s world view may not align with the church’s values or mission.
Once you’ve thought through these questions, you need to identify those lenders that seem to be right for your church and begin interviewing them. Start by networking with other churches that have recently worked with lenders. Talk with builders that specialize in serving churches. And search the internet for Christian lenders and those that provide church loans. Once you have your short list, you’ll be ready to consider the crucial questions.
The Crucial Questions
Question #1: Does the financial institution understand churches?
In other words, will the financial institution understand the unique complexities that are inherent to a church building project? Will it understand income sources such as tithing and capital campaigns?
It is crucial to find a lender that sees your project as more than just another opportunity to lend money. You want to work with a financial institution that will help you live out the biblical injunctions to both “walk by faith” and “count the cost.”
Question #2: What kind of experience does the financial institution have?
There are two areas to investigate here. The first is easy. How long has the institution been in business? What is its history? The second isn’t as easy. What is the lender’s experience working with churches and other ministries? Investigating a lender’s previous experience can be time consuming. Also, if a lender’s experience is narrow (e.g.: they can do construction loans but are not interested in carrying the loan further), researching that lender’s past experience can be difficult.
Does the institution have experience working with churches and the capability to provide products and services that make them more effective? What other kinds of organizations does the institution finance? Do those organizations mirror your values?
Find an institution that has experience working with ministries of all sizes and that shares your passion for kingdom impact.
Question #3: Does the financial institution want to partner with us?
Some financial institutions look at each loan as a “one-off” deal—once the contract is signed, it’s off to the next deal. Others want to begin partnerships with their clients.
Will the financial institution you choose be there for your future financial needs? Is it willing to walk alongside you through future projects? Does it have a track record as a banking resource that builds relationships with the ministries it serves?
With a reliable financial partner, you can pursue your ministry vision and goals with peace of mind.
Question #4: Is the financial institution willing to be flexible to meet our needs?
Many financial institutions tailor their clients to meet their products rather than the other way around. You want to find an institution that has the ability and flexibility to try new growth ideas and strategies, one that will look for new ways to support your ministry.
A growing, thriving church can be a blessing and a challenge, especially when that growth causes growing pains. You can alleviate much of the pain by prayerfully and carefully screening lenders. By asking a few crucial questions, you can turn your momentary pain into eternally effective gain.
David Van Winkle is Vice President of Sales for ECCU’s Church and Ministry Lending Division.