I’ve been thinking about what’s new and interesting in the world of ministry financial services, wanting to wow you with fun facts and useful information. Which is why I’m devoting this post to…(drumroll please)…a new ministry report card. Okay, technically it’s called the Borrower Health Assessment, but that doesn’t make your stomach drop the way “report card” does. And it really works like a report card for ministries asking questions like: Are we making wise financial decisions? Are we financially healthy? Will we qualify to refinance when our loan matures? (This last one is most important to many ministries these days.)
Helping to explain the Borrower Health Assessment is David Lee, ministry development officer for ECCU, and two representatives from ministries that have already benefited from this tool: Dave Beatty from West Bowles Community Church in Littleton, Colorado, and Ross Harrop from Springs Community Church in Colorado Springs, Colorado.
Ministry Banking Guy: What inspired this new tool for ministries?
Lee: Our research has shown that a major concern for ministries today is that they simply don’t know if they are financially sound enough to qualify for a refinance once their 5-year term is up. The tool was designed to help ministries understand—objectively and in laymen’s terms—their own financial health.
MBG: When is the best time for a ministry to take advantage of this tool?
Lee: The Borrower Health Assessment is preventative rather than a treatment tool. Like understanding the symptoms before you have the heart attack. Engaging ministries even two to three years before their loan matures lets them know what they need to work on long before they need to renew. It even gives them time to launch a capital campaign, if necessary, to compensate for things like declining property values.
Beatty: We used this tool three years before our renewal, and it prompted us to pare back our budget and look hard at personnel costs. We now look carefully at our numbers on a monthly basis, preparing us to pass with flying colors when it comes time to renew our loan.
Harrop: For us, we got the information too late. Our lender at the time was saying, “We like you….but there are some yellow caution flags with renewing your loan.” Then we were referred to ECCU, and David (Lee) offered us the Borrower Health Assessment. While the results aligned with our other lender’s feedback, the difference was that ECCU was objective, not trying to persuade us to do anything, but just saying, “Here is what we see.” It really helped us understand our strengths and weaknesses.
MBG: So, why doesn’t every ministry borrower just ask their lender for this pre-underwriting evaluation?
Lee: You can’t just talk to any lender to get the best pulse on your financial health. They don’t all understand the financial realities of a church or ministry.
Harrop: ECCU not only understands our belief system, but they also get the business side of ministry. So, when David came along with a tool that took an unbiased look at our budget and financials and could objectively explain why we did not have a sustainable financial model…I realized I have a partner in ministry. ECCU helped us bring a business sense to our decision making. We finally understood that a budget is simply ministry expressed in dollars.
Beatty: We used to go to our lender and ask these questions. Our former lender would say, “Here’s what you should have done.” ECCU was much more proactive. They said, “Here’s what we need to do together; here’s what we’re forecasting….” Going through the pre-approval process was hugely helpful. They walked through it with us.
MBG: What advice do you have for ministries approaching a loan renewal?
Beatty: Get a good picture of what you need to qualify for your renewal and maintain your lending relationship. There should not be any surprises. The Borrower Health Assessment—combined with a working relationship with someone who can walk you though it—is extremely valuable. One without the other may not be as effective. Anyone can generate numbers and say, “Look at this and take an inventory of how you’re doing.” But actually sitting down and talking with someone about it? That’s excellent.
Harrop: Get objective information on the health of your ministry. ECCU did not tell us what to do, but gave us information they had compiled from national percentages, allowing us to compare to some of the most successful churches. This put things in the spotlight for us, giving us financial clarification that we had never experienced before.
Lee: It sounds cheesy, but ask yourself, “Have we had our fiscal?” Your ministry should assess its financial health annually—even monthly—just like you should assess your own personal health long before problems arise. Talk to ECCU about using the Borrower Health Assessment and treat any ailments now, before it’s time to renew your loan. Whether you’re an ECCU member or not, if we can help your ministry become better aware and more in tune with what is healthy financially, then we have fulfilled our mission.