“Would our ministry qualify for a loan?” As the economy continues to recover, many ministry leaders are asking this question. One place to find answers is the people who make loan decisions. So I asked two ECCU lending experts who not only have extensive experience but also helped guide many ministries through the economic turmoil of the past four years. [read more]
One thing many ministries discovered during the economic downturn is that they weren’t as financially solid as they thought. As revenue declined, their financial vulnerability became increasingly apparent. Loan payments, for example, that once seemed realistic suddenly weren’t.
One way ECCU responded to this situation was by forming a new team to help struggling member ministries become financially healthy again. I asked Don Hughes, who led that team and is now one of ECCU’s regional directors, a couple questions about what we learned from this experience. [read more]
Before mid-2008, most ministries had little trouble qualifying for financing. If they met a lender’s criteria, they were deemed a healthy borrower and it was simply a matter of time and paperwork before the needed funds were in hand.
Then the Great Recession hit, and when it was over, the definition of a “healthy borrower” had changed dramatically. I asked Mike Boblit, one of ECCU’s regional directors, a couple questions about this dramatic shift. [read more]
“Over the past several years, many churches made the mistake of borrowing everything a bank was willing to lend them. As a result, many ministries are facing the strangling hold of lenders and interest payments. Seek to restructure the debt…and resolve to never again borrow an amount of money that would jeopardize the ministry.” – Joseph Sangl, Top 10 Financial Mistakes Churches Make
Yeah, that hits a nerve for me. So I would add this to Sangl’s advice: Along with resolving to never allow debt to jeopardize your ministry, align your ministry with a financial partner who cares about your vision as much as you do and will help protect you from such decisions.
Check out the rest of the list at Top 10 Financial Mistakes Churches Make. Has your church bounced back from making any of these common mistakes? How did you recover?
A loan denial isn’t always bad, especially if it leads you to implement a best practice. According to When the Bank Says No a Your Church blog by Lee Dean, being rejected for a loan request creates an opportunity for your ministry to “pursue another lender, adjust the project, improve its financial situation, or a combination of the three.” One way to improve your financial situation is by assessing your ministry’s cash reserves, an important best practice whether or not you’re trying to get a loan. But getting your reserves where they need to be, your ministry can be in a better position to secure that loan approval sometime down the road.