Commonwealth Church

Finance

“What Growing Churches Across America Need To Know…”

What About The Current Economic Condition And Your Church Borrowing?

From Recent News Articles . . .

“Crisis of confidence leads to fears of bear market”  USA Today 8/9/2011

“Cash-strapped Americans are bracing for a further squeeze following last week’s downgrade of U.S. government debt, as interest rates on deposits continue to fall and some borrowing costs edge higher.”  Wall Street Journal   8/9/2011

As we read and listen to press and TV/Radio reports, it’s hard not to become depressed and feel pressure to join the “doom and gloom” crowd!

Has the market been in turmoil over the past several years?  Many would answer with a resounding “Yes!”  Has the banking industry been in turmoil since the housing bust?  Again, many would resound “Yes!”

However, in the 30 years in which Commonwealth has been financing the churches of America, we have never seen so much activity!

There are still MANY growing churches!

There is a greater desire than we’ve EVER seen for LONG TERM FIXED INTEREST RATES that hedge against an uncertain interest rate future!

Investment Bank (Commonwealth) financing has never been more popular than it is now.  Why?  In this market investors are attracted to less volatile investment opportunities that are collateralized by real estate.

Churches using the Investment Bank financing option offer just such investment opportunities, both to their constituency and, often, to the general public.

• Is your church growing?
• Does your church need to refinance an upcoming balloon note?
• Do you need to purchase a new facility?
• Do you need to renovate your existing facility?

Call Commonwealth Today!

Commonwealth Church Finance

“Financing America’s Churches for 30 Years!”

(800) 473-4124

Email Commonwealth!

Financing America’s Churches Since 1981!

Commonwealth Church

Finance

“What Growing Churches Across America Need To Know…”

What Do I Need To Know BEFORE I Begin The Building or Borrowing Process?

Luke 14:28-30

“Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?  For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you,  saying, ‘This person began to build and wasn’t able to finish.’

So . . . Your church is ready to expand, buy, relocate or borrow for the first time (or the 10th time).  Congratulations!  YOUR CHURCH is a growing church!

“Counting The Cost” in the scripture above refers to MORE than money!  Just a few of the areas of “Cost” are:

• Time – Often yours!
• Expertise – Particularly if you don’t have it!
• Relationships – A major building campaign strains even the best of relationships!
• Church Leadership – You’ll find out who your leaders really are (including YOU!)
• Money – of course!

Question #1 – As elementary as this sounds . . . Is God directing our project?  For whose Glory are we entering into this project?

Be sure the reason is right!

Question #2 – Have we built the right foundation?  A good foundation goes DEEP in order to support all that it will hold.  Just a few of the foundational items to consider are:

• Support of the constituency of the church for the project.
• Strong leadership with expertise in the fields in which they will be working.
• Understanding the proper sequencing of events.  Improper sequencing of events can cost the church TIME and MONEY!  (A LOT of each!!!)
• Engaging the right professionals to assist you in your journey.  The old adage – “You get what you pay for!” is so often true!

For a FREE, No-Obligation copy of Commonwealth’s 7 Steps to Successfully Navigate the Church Financing Maze, click this link:

#7 Steps to Successfully Navigate The Church Financing Maze!

Commonwealth Church Finance

“Financing America’s Churches for 30 Years!”

(800) 473-4124

info@commonwealthchurchfinance.com

Financing America’s Churches Since 1981!

Commonwealth Church

Finance

“What Growing Churches Across America Need To Know…”

What Is “Investment Bank

Financing”?

Can It Benefit My Church?

Definition of Investment Bank

(From Wikipedia):

“An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client’s agent in the issuance of securities.”

Investment Banks - such as Commonwealth Church Finance, Inc. – unlike commercial and retail banks, do not take deposits.  They do, however, offer lending services to their clients.

Commonwealth connects churches who have a need for capital (borrowers) with investors (lenders) who have a desire to lend or invest their capital.

While Investment Bank financing is used primarily by corporations and municipalities, there are also distinct advantages offered to CHURCHES who may use Investment Bank financing.

The Securities Act of 1933 offers CHURCHES the same exemptions from registration offered to government entities, banks and S&Ls who issue securities to finance debt.

That exemption from registration significantly reduces the cost and timing of issuing the securities.

So . . . What are the benefits for your church if you use Investment Bank financing versus commercial bank financing?

• Interest rates may be set (at lower rates) to suit the market for the securities.  Related parties are often willing to invest at a lower than market rate because of their relationship with the issuer (church).
• Fixed Interest Rates for the life of the loan! NO BALLOONS! No interest rate surprises down the road should interest rates increase.
• No Personal Guarantees (Co-signers) required! Investment Bank loans are made directly to the church corporation.
• No Prepayment Penalties! Churches are encouraged to retire debt early.
• Open Ended Mortgages allow growing churches to borrow additional funds in the future WITHOUT the need to refinance existing debt.  This allows the church to keep favorable current interest rates!

Contact your Commonwealth consultant to see if Investment Bank Financing is right for your church!

E-Mail or Call Today!

Commonwealth Church Finance

“Financing America’s Churches for 30 Years!”

(800) 473-4124

info@commonwealthchurchfinance.com

Financing America’s Churches Since 1981!

Commonwealth Church

Finance

“What Growing Churches Across America Need To Know…”

Oftentimes churches decide to build, hire an architect

to design what theywant and then discover that they cannot afford to build what the architect designed for them.  They then repeatedly re-design the plans (all at additional architectural expense!) to try to get it to an affordable position.As simple as it seems, there IS a BETTER WAY!  Determine what the church can afford FIRST and then design a building to meet the church’s financial ability.

Sure, there is a better way . . . as you say . . . but, how do I get there from where I am?

Determine your Building Budget

How?

1. Start with CASH you already have …
2. Determine how much CASH you can raise by the end of your construction project (estimate conservatively – this is neither the time nor the place for evangelical estimation!).
3. How much can we BORROW?
4. Is there anything we can sell (Land, old facility, etc.)?

The total of the above is your BUILDING BUDGET.

How Much Can/Should I Borrow?

We should all realize that there are HEALTHY and UNHEALTHY actions for all churches.  Here, we will be concerned with HEALTHY actions.

A church may normally, healthily, borrow approximately 3.5 times their annual unrestricted income.  In other words, a church with an annual unrestricted income of $1,000,000 normally may borrow up to $3,500,000 and still remain financially healthy.  The further above 3.5 times annual income a church borrows the further it treads into “unhealthy” territory!

Control Your Spending!

The BEST BUDGET IN THE WORLD is WORTHLESS if there are no controls on spending the dollars in the budget!

CHANGE ORDERS, COST OVERRUNS and POOR PLANNING will destroy all of the up-front effort you put into the budgeting process. BE SURE you have controls in place to INSURE you remain within your budget.

Your Commonwealth Church Finance consultant is trained to assist you in identifying needs versus wants.  Your Commonwealth consultant also insures that you count the cost.

E-Mail or Call Today!

Commonwealth Church Finance

“Financing America’s Churches for 29 Years!”

(800) 473-4124

info@commonwealthchurchfinance.com

Financing America’s Churches Since 1981!

Commonwealth Church

Finance

“What Growing Churches Across America Need To Know…”

Haven’t you heard?  The economy is bad!

Apparently, thousands of churches across America have not gotten the word yet . . . They are being blessed AND they are GROWING!

Healthy churches are buying and building!

This month we look at church wants versus church needs in the building arena.

Philippians 4:19 “But my God shall supply all your need according to his riches in glory by Christ Jesus.”

How do we define the NEED?

Start by asking questions:

• What is the vision of our church?
• What is the mission of our church?
• Is the vision & mission of our church being hindered or enhanced by our facilities?

The answers to the above questions may well define whether new construction is a NEED or a WANT!  For instance, if the vision & mission of the church is to minister through off site small groups, it may be a WANT rather than a NEED if the church plans to build an addition for classrooms.  New classrooms will likely NOT enhance the focus of the ministry.

Experts in Church Financing have recognized for years that churches that build to the NEEDS rarely struggle financially, while churches that build to their WANTS often struggle financially!

How do we define the ABILITY?

Luke 14:28-30

“Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it?  For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him, saying, ‘This fellow began to build and was not able to finish.’

We all know there is a fine line between faith and foolishness.  Dr. Luke gives some excellent advice above.  FIRST count the cost!  BEFORE you start your project.

Be sure the church can afford to pay for the project.  Again, churches can generally afford to pay for NEEDS while they often struggle to pay for WANTS!

Your Commonwealth Church Finance consultant is trained to assist you in identifying needs versus wants.  Your Commonwealth consultant also insures that you count the cost.

Call Today!

Commonwealth Church Finance

“Financing America’s Churches for 29 Years!”

(800) 473-4124

info@commonwealthchurchfinance.com

Commonwealth Church

Finance

“What We’re Hearing From Churches

Around America”

There is a great deal to be learned from just  listening!  The old adage states: “God gave  us two ears and one mouth!  That’s the  proportion with which He wishes us to use  them.”Here are some recent comments      we’ve heard while we were listening . . .

Interest Rate Risk

From a church in North Georgia:

“Now we are looking at the possibility of using bond financing to eliminate the potential interest rate risk that we will have to deal with using traditional bank loan financing.”  This church understands that a loan that balloons in 3-5 years will likely balloon (or renew) at a higher interest rate than today’s loan rate.  Commonwealth’s loans FIX THE INTEREST RATE FOR THE LIFE OF THE LOAN!  No balloons, no renewals, no surprises.

Collateral – Loan to Value

From a church in Arizona:

“Our bank is now asking for collateral valued at two times the amount of the loan we are seeking from them.  That effectively eliminates us from being able to refinance!”   What’s been happening with the real estate market has scared the banking community.  In order to maintain their standing with the FDIC and state regulators, many have significantly reduced their loan-to-value (the amount of collateral required versus the size of the loan) guidelines – thus eliminating many churches from the borrowing market.Commonwealth still uses the same 75% loan-to-value ratio it has been using for several decades.

Performing Loans – “Called” by the Bank

From several churches:

Our bank has informed us that they will not be renewing our loan when it balloons.  We’ve never been late!  We’ve been a customer of the bank for years!The pressure on banks by the FDIC and state regulators for “liquidity” is tremendous.  Loans reduce liquidity, while calling loans increases bank liquidity.

Commonwealth, which uses investor capital to fund loans, does not face these liquidity challenges.

Commonwealth Church Finance

“Financing America’s Churches for 29 Years!”

(800) 473-4124

info@commonwealthchurchfinance.com

Commonwealth Church

Finance

“What Growing Churches Across America Need To Know…”

Commonwealth Offers NO-COST, NO-OBLIGATION Borrowing Analysis For Your Church

an·a·lyze (US) or Brit an·a·lyse /

ˈænəˌlaɪz/verb an·a·lyz·es; an·a·lyzed; an·a·lyz·ing [+ obj] 1: to study (something) closely and carefully : to learn the nature and relationship of the parts of (something) by a close and careful examination.

Commonwealth Church Finance, Inc. is pleased to announce a new, FREE service to the churches of America!

Commonwealth will perform an analysis of your church’s borrowing ability.  We will provide you with a Financial Analysis Summary Report that you will find a useful tool as you make decisions about borrowing…

• Should we borrow?
• How much should we borrow?
• When should we borrow – now or later?
• What can we afford to borrow and still maintain our financial health?

Simply click the link below to send an email to start the process.  You will receive a reply requesting financial and attendance data from the church.

Once Commonwealth receives the requested data, one of our Church Financial Professionals will perform the analysis and send you a copy of the Summary Report.

You may see a sample of the Summary report following this  communication.

Request yours today by clicking this link:  Request For Financial Summary!

Call or email if you have any questions!

Commonwealth Church Finance

“Financing America’s Churches for 30 Years!”

(800) 473-4124

Email Commonwealth!

 Sample Financial Summary

This Financial Analysis of your church’s borrowing ability

has been prepared for you by Commonwealth Church Finance, Inc.

677 Jonesboro Road, McDonough, GA 30253

(800) 251-5188 ext 201

Financing America’s Churches Since 1981!

Commonwealth Church

Finance

Lessons Learned . . . The HARD Way!

This month we have the opportunity to learn the EASY way . . . through other people’s experiences!

Unfortunately, most of us seem to prefer the HARD way – that is, by making our own mistakes and learning our own lessons!

Surely, even though I’m doing what others have done, I WILL have different results!  Generally not!

Lesson #1

“The first thing I’ll do is hire an architect to design what I envision.”  Wrong!  See Luke 14:28.  First – COUNT THE COST to be sure you can finish what you start!

Many (not all) architects will design what you ask for.  It is YOUR responsibility to be sure you know what you can afford to build.  Simple good stewardship applies!

Hundreds of churches have many thousands of dollars invested in architectural plans sitting in the corner of the office.  These plans will never be used.  These are designs of what the church wanted, not what it could afford!

Lesson #2

“If we build it, they will come!”

A new building does NOT guarantee an increase in attendance.  Grow the church first!  Reach people with the Gospel of Jesus Christ!  THEN build the building to house them and allow for reasonable growth.  Often churches can afford to build for 2 to 3 times their current attendance.

Lesson #3

“We can change the design as we see needs as the building is being constructed”

Again, WRONG!  Change Orders have been the death knell to many a church construction project.  Many unscrupulous contractors will intentionally underbid a project, knowing that they will make up the difference – and more – via “change orders.”

Design what you need and can afford, and STICK TO THE PLAN!

Lesson #4

“Our contractor estimated the building cost to be $____!  We can afford that!  Let’s get started.”

Did your contractor consider all of the site development costs – Utilities, Civil Engineering, Water Retention/Detention, etc?  Is ALL of the property usable?  Are there wetlands involved?  Has the municipality signed off on the plans?  Are there any zoning or permitting issues?  Etc, etc.

Are there only 4 Lessons?  ABSOLUTELY NOT!  Your Commonwealth consultant can help you avoid the land mines as you walk through the building and refinancing mine field.

Call us today!

Don’t get caught when interest rates begin to rise!

CALL COMMONWEALTH CHURCH FINANCE TODAY!

Commonwealth Church Finance
“Financing America’s Churches for 30 Years!”
(800) 473-4124
info@commonwealthchurchfinance.com

Financing America’s Churches Since 1981!

Commonwealth Church

Finance

Are All Lenders The Same?
What Makes Commonwealth Different?

Today’s economic environment demands that your church debt be designed with the greatest long term advantages to the church in mind at all times!
Commonwealth Church Finance doesn’t just make loans – they custom tailor financial designs specifically for your church!

So . . . What Do I Need To Know?

Your church is like no other church.  It is unique in many ways.  God has specifically designed your ministry to meet the needs of your constituency and outreach targets.

Therefore, the “one size fits all” approach of most of the church lending community DOES NOT WORK!  Not every church needs:
*     Short term loans (3-5 years) that may not even be renewed by the lender!
*     Variable rate loans – i.e. rates not fixed for the life of the loan.

So . . . What may be some of the features of a Commonwealth Church Finance custom tailored loan for your church?  Here are a few:
*   Variable amortization periods to as long as 30 years, if qualified.
*   Construction and permanent financing “all in one!”  No need to convert a construction loan to permanent financing.
*   For qualifying churches, interest rates beginning in the 5%+ range.
*   Interest rates fixed for the life of the loan.  No worry about “balloons” or “renewals” by the bank.  You know when you make your first payment, what your last payment will be – even if it is 30 years in the future!  What a relief for the budget planning team!

And more . . . Let us customize a financial design for you!

Don’t get caught when interest rates begin to rise!

CALL COMMONWEALTH CHURCH FINANCE TODAY!

Commonwealth Church Finance
“Financing America’s Churches for 29 Years!”
(800) 473-4124
info@commonwealthchurchfinance.com

Financing America’s Churches Since 1981!

Commonwealth Church Finance

What’s Happening In The Banking Industry and How Does It Affect My Church?

Almost daily we read about the turmoil in the banking industry.  We’ve become experts with terms we had never even heard of before . . . “distressed properties”, “non-performing loans”, “upside-down loans”, “toxic assets” etc.

Unfortunately, these are not positive terms!

So . . . How can my church be affected?

Remember “the good old days”, when you could call the church’s banker, tell them you’re going to be building another building and need a loan and immediately get a resounding “Yes!”?  As Margaret Mitchell once said, those days are “gone with the wind.”

Today, many banks are not in the struggle of their life, they’re in a struggle FOR their life!  The name of the game for banks is “liquidity.”  Their primary goal in life is to SURVIVE!  They do this by staying off the radar screen of FDIC and their state regulators.

You probably have a pastor friend who has been informed by their bank – with whom they have faithfully done good business for many years – that the bank no longer wishes to carry their loan.  The church has been instructed to find another lender and PAY OFF the bank.  That is one of the more visible aspects of the drive for liquidity – the payoff of existing outstanding loans – whether performing or non-performing!

We’ve heard from churches who have been informed that their bank now requires a Loan to Value ratio of NO MORE than 50%!  e.g – a $1,000,000 loan will require $2,000,000 of collateral!  Most churches are simply NOT in that position!

So . . . What can your church do to be prepared should you get “the call” or need additional financing in this economy?

• Know Your Borrowing Alternatives – Commonwealth Church Finance is one of those alternatives.
• Realize the Importance of CASH FLOW –   Most lenders today require churches to demonstrate the ability to repay their debt based upon historical financial information.  In other words, the church’s financial statements must show sufficient cash flow to service the new mortgage debt.
• Understand the Pitfalls of Short Term Borrowing – Understand that a loan that is amortized over 20 or 30 years, BUT has an interest rate fixed for only 2 – 5 years is a SHORT TERM, VARIABLE RATE LOAN!  Many industry analysts believe the historically low interest rates we see today will, at some point in the future, become a distant memory.  In other words, rates will go up!  If the interest rate on your church’s 20 year loan rises 2%, the payments will increase by  17.5%*!  Can your church absorb that!  What is the ministry cost?
• Be Prepared by Knowing Which of Your Lending Professionals Offer Life of the Loan Fixed Interest Rates – Again, Commonwealth is the one.

This list is by no means comprehensive.  The Lending Industry for churches is changing rapidly.  Education and Knowledge are among your most valuable assets!

*Assumes interest rate increase from 5% to 7%

Commonwealth Church Finance

“Financing America’s Churches for 29 Years!”

(800) 473-4124

info@commonwealthchurchfinance.com