The process of applying for a loan can be daunting, and people often do not know where to begin. The following steps will help make the process smoother when you want to file a church loan application.
- Choose Your Church Loan Option: There are two options to choose from when applying for a church loan — taking out an equity line or asking the bank for additional funds. An equity line allows you to withdraw funds whenever needed (usually at least once per month). In contrast, additional funding is only given as one lump sum that must be paid back over time with interest.
- Determine What You Need the Money For: After deciding which type of loan you want, it’s important to understand what you plan on using the money for – either short-term growth or long-term financial stability.
- List the Property: It is crucial to list all of your property and its value. This includes buildings, land, furniture, equipment, and more. Ensure an appraisal for each item (if necessary) to ensure the best valuation options.
- Categorize Assets: There are three classes of assets — capital assets (non-liquid), operating assets (liquid), and intangible assets (which have no physical substance such as goodwill).
- Complete a Financial Statement: A financial statement provides information about your church’s operations — income and expenses — which relate closely to the type of loan you request from the bank or credit union. You can create one on your own using excel or word software or contact your financial advisor for assistance.
- Create a Loan Projection: All of the information on the previous documents will be used to create a loan projection. This projection is essentially an estimate of how much money you need, what it will be used for and when, and the likelihood that you’ll repay the loan on time.
- Finalize Your Decision: Once you’ve completed all of these steps, carefully look over all of the data that has been collected — then make a decision as to whether or not you want to take out a church loan from your bank or credit union.
- There are additional factors to consider before filing your church loan application, such as interest rates, repayment schedules, length of the loan, fees, and more.
- When you have decided that a loan is right for you, make sure to consult your financial advisor before applying.
- Always complete the full church loan application by providing basic information such as your personal and bank details, along with your church’s balance sheet and other important documentation.
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