Administration, Financing and Construction Resources

to Help Manage the Business of the Church

A Loan Broker May be Able to Get the Church Loan

A loan broker is often times used by a church that is having difficulty getting a church loan for the amount of money that they need, be it church construction financing, a bridge loan or church loan.  This may be because the church loan is greater than what the church can afford to borrow.  It may be because the church needs some help from a church loan broker in putting together the information and presenting it to the bank in the most coherent fashion.  A loan broker may provide a service to the church by offering to shop several church loan lenders from a single application to the broker.  A loan broker can provide a valuable service to the church desiring to get a church loan or construction financing. 

Unfortunately, this is a field that has more than its fair share of cheats and con artists.  If you use a broker ( and there are many good ones) check out their references well.  Loan brokers get paid to find you a church loan; fees typically from 1% of the church loan to whatever the market will bear (some try to charge as much as 10%).  Make sure you understand in writing what the broker gets paid, how (and who) pays them and when.  Some brokers get paid by the lender, make sure they disclose this and negotiate fees accordingly.

Logic & wisdom says that if the loan broker really thought they could get you a church loan, they would invest time and effort in you in the expectation of a commission.  If they require money up front, they probably don't have the expectation of closing that they would like you to believe. If you are having a hard time getting the church financing you need, you may want to consider a built-to-suit lease with purchase option, like the one offered through Build to Minister Program as an alternative to church financing.

Consider carefully how much the loan broker is charging to help you secure your church financing.  A church loan is expensive enough without adding too much additional cost in loan broker fees to the cost of the building program.  Most brokers, dealing with churches that have a reasonable chance of obtaining financing, will charge around 1-2% in fees, depending on the amount of work they have to put into your loan in conjunction with the size of the loan.  Smaller loans can expect to pay higher fees as a percentage of the loan.

An option to using a loan broker might be a church construction consultant who may be able to incorporate preparing a financial package and arranging for some introductions to church friendly lenders as part of a larger scope of services.  A church building consultant may be able to assist in obtaining a church loan without charging you a brokers fee or taking compensation for helping you get the church financing you need.  Ultimately, the church needs to carefully evaluate the value and cost of services and select a loan broker only after due diligence and developing a complete understanding of the costs involved.

 

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