Truth About Church Loans Part 1

We do have scriptural precedent regarding debt. Churches should be cautious of their debt in much the same way individuals should be cautious of their debt. Although the philosophy of being “debt-free” can result in comfort or stability, it can also result in stagnation or refusal to invest in the future.

Attitudes about debt vary considerably between doctrines, denominations, ages, localities, sizes, and demographics. Therefore, you will almost certainly face contrasting attitudes about debt within your congregation; some members will believe the church should have zero debt while others will be comfortable with larger amounts.

Think like a lender

Lenders will determine the amount of debt your congregation can service by analyzing your average number of adult attendees and your average “unrestricted” tithes (i.e., the dollars not allocated to overhead or other expenses). In one measurement, lenders will divide the proposed debt across the number of your average adult members. The lower the ratio of debt per member, the lower the likelihood that the debt will be too burdensome. 1%-2% per member is usually the target, with 3% being a red flag.

In relation to your overall budget, your proposed annual debt payments should be no more than 30% of annual unrestricted tithes and offerings. Simply stated, your church should have the majority of your budget (about 70-75%) to cover operational expenses such as ministries or missions.

Eden Religious Facilities has extensive experience helping congregations budget for growth and expansion. Additionally, we can help you estimate the size and needs of your new facility. Contact Eden Religious Facilities to speak to one of our advisors.

Contact Eden Religious Facilities to speak to one of our advisors.