Over the years, THE VAUGHN GROUP has noticed that Churches had difficulties financing their projects. There is not one particular solution to this mammoth problem. Some Churches have inroads to dollars, lenders knocking on their doors, yet others have difficulties securing financing for a variety of reasons. Yet, still church building projects must go forward. Church financing has changed dramatically in the last few years. At one point, Churches could obtain construction loans from commercial lending institutions, savings and loans, insurance companies, pension funds, or other private lenders.

Considered important community development, Church construction and renovation projects often received loans at below market rates. In recent years conventional lenders have been reluctant to loan large sums of money to churches, though this is now changing. Lenders are realizing that it is good business doing business with Churches.
Though financing a Church can be difficult today, Churches can still find lenders favorable to their request for a loan. To get started on your search for capital to build or expand your Church facility, consider the following avenues.

Banks and S & L's

THE VAUGHN GROUP strongly recommends maintaining a business relationship with your current lender. The lender can provide you with a written list of requirements and what are the procedures to follow when seeking a building loan from their institution. When a local bank is willing to grant a loan to a Church, it can provide an expedient means of financing. The Church must realize that for the most part, a new worship facility can take up to three years to build, and with a medium size renovation project it may be as many as a couple of phases. With interest rates, bank and personal changes on a regular basis, locking in a loan can become very critical in the building process. Often a Church can capitalize on its ongoing relationship with bank personnel by periodically meeting with their lender.
Deregulation has blurred many of the traditional lines between lenders. Many S & Ls provide essentially the same services as banks. With the need to expand, lending institutions are now reinvesting in the community to win the approval of community groups to expand or merge with other institutions.
Pre-development Funding – We always recommend to our client that they establish a predevelopment budget. Available dollars are necessary to fund initial items such as preliminary design, legal services, marketing, accounting, etc. Many lending institutions will lend their client funding for pre-development cost.