Are you facing default?    Has the bank said they cannot renew your loan?

The current economic downturn has forced many churches to consider the possibility that they may find themselves in default on obligations to lenders.  Many churches do not understand how common this situation is among America’s churches.  Several factors have converged to create this new experience for hundreds of churches.  Consider these conditions and determine if any of them relate to you or someone you know.

1) Church incomes have fallen as the economy has impacted the church members who support the ministry of the church.  Many are unemployed, underemployed, or have taken cuts in wages and benefits to maintain their jobs.  This translates into less income to the church.

2) Church loans are generally reviewed every 5 years (sometimes sooner, occasionally later) to determine that the value of the asset and the yield (interest) on the note is in line with current requirements.  Often churches find that the value of their buildings, according to current lender appraisals, have fallen dramatically and the loan that they originally acquired cannot be renewed on terms that fit into their budget.  Lenders are reluctant to renew many loans under conditions that are reasonable regarding interest, equity, and terms.

3) Churches have embarked upon ill timed capital campaigns that have fallen far short of anticipated results.

4) Ministries have been begun, within the church, that while important may not create sufficient income to sustain themselves.  Ministry decisions such as this are not understood by lenders and create difficulties in the church- lender relationship.

5) Churches have acquired facilities that were required by growth, but now debt service may strain the budget.  Growth and income may not be moving forward together as anticipated when the property was acquired.

These are not unusual events in the life of the church.  They can be handled in ways that strengthen ministry, affirm leadership, and create minimal disruption for the body.  A church faced with situations such as have been enumerated often fails to understand and review the vast number of options available to move through these circumstances.  A business the size of the church may well be led by an executive that has spent his life learning about the various crises that may come upon his business.   The executive is prepared to consider multiple options in every situation.   Churches are led by leaders whose mission and goals are spiritual.  These leaders are not prepared by education or experience to identify multiple solutions to every new challenge that comes to the church.  When the church is interacting with the secular community, as it does in all matters relating to buildings or assets, it may have a distinct disadvantage.

The Church Consultants (TCC) are prepared to come alongside and offer “real world” solutions to churches that are financially distressed.  There are options that can preserve ministry even when financial setbacks have occurred.  TCC can provide a qualified consultant to work with your church and the creditors who look to you for payment.  Often, an expert will bring understandings of the mission and capabilities of the church to lenders.  Our consultants have substantial background with a variety of lenders as well as churches of every denomination.  They are conversant in building values, creative development of equity ratios, and they can provide multiple ethical means of working through any problem that could disrupt ministry.  Every church deserves consultants that can work with them to create solutions that are acceptable to their creditors.  It is seldom in the best interest of the church to become delinquent   Identifying looming difficulties before they become acute allows solid church leadership to respond appropriately.  Do not allow financial hardship to cripple Ministry.  Expert help is available.