Why Should the Church Borrow Money over Raising Funds through Donations?

While raising money as a congregation is always a good idea it can often make sense to borrow most of the funds needed to complete a large project or acquisition. While borrowing money has the expense of paying interest on the loan and raising money through donations does not; the process of raising large sums of money can take a long time and may have the added affect of negatively impacting normal contributions to tithes and offerings by the members.

Griffin Capital Funding offers an easy loan process and terms that will help the church afford the new loan payment. “A lot of churches come to us with partially completed projects; they had the intention of raising enough money to complete the project but either had cost over-runs or could not raise all of the funds needed.” stated John Berardino, Senior Vice President of Griffin Capital Funding. Securing a loan ahead of time allows the church to still raise funds for the project and either reduce the amount of the loan needed or save the additional funds for other purposes. Underwriters at some institutions are hesitant to take over a project that is partially completed and has stalled because of funding. “At Griffin we see these types of projects on a fairly regular basis. Although this is not an ideal situation we can certainly provide the financing needed to get the project completed, provided it makes sense.” John Berardino stated. Don't take the chance of being halfway through a building or construction project only to discover that you've run out of money. It is best to get approved for the amount of financing you need to complete the project and then determine how much of your own money to put into the project.

Determining the best loan option for your church is necessary when approaching a lender for a loan. In most cases, lenders such as Griffin Capital Funding are willing to work with the church committee to determine the best loan program and interest rate to fit the churches needs. Most borrowers, including churches are interested in obtaining the lowest interest rate possible; but often times programs that offer the lowest interest rates also have the most restrictive underwriting standards. “At Griffin we offer a number of different loan programs. Some of the programs maximize loan amount with easy underwriting standards while others minimize costs and interest rate.” John Berardino explained.

While fundraising is certainly an important part of a church’s financial plan it should be used in conjunction with an overall plan that takes into consideration possible cost over-runs and current church expenses. When planning on any large project it is best to determine how much money you think the church may be able to raise as well as the expected cost of the project, the analyst will help you determine what the maximum loan amount the church will be able to afford. Knowing these factors will help the church determine what they should borrow and what they should raise from donations.