Help! I Need a Loan … I Think?
I’m not a loan officer. I’m a ministry consultant. I have been for many years, and in that time I’ve worked with many congregations that should not be borrowing the amount of money they seek, and with other congregations that let mission and ministry opportunities pass them by because they are so opposed to taking on debt.
Here are some principles I try to share with congregations considering a loan:
+ Have you counted the cost? – Maybe it’s a characteristic of our “charge card” society, but sometimes people (and congregations) seem to forget that a loan has to be repaid. Sometimes the cost of paying back a loan is devastating–and I’m not talking just money here. I’m talking ministry! Taking on too much debt can eat up all the resources and energy that a congregation could be spending on developing effective new ministries and mission outreach. Every meeting, every report focuses on financial survival rather than expanding the Kingdom . . . On the other hand, there are some congregations that are very capable of handling new debt, but put off proceeding with a vital mission or ministry project because they are so fiscally conservative. There, again, finance takes the front seat at the cost of expanding the Kingdom. There can be a cost to not borrowing.
+ Have you considered a capital campaign? – If you borrow $300,000 at 5 percent for 30 years, you wind up paying back about $580,000 or $1,600 a month (approx. figures). What that means is that for every $100,000 you can raise in a capital campaign, you save $193,000 in loan payments over the course of the loan and reduce your debt service by about $6,400 a year–money that can be used for mission and ministry. Beyond that, those of us who have served as consultants with LCEF’s Capital Funding Services have found that a capital campaign often provides an opportunity to bring people on board with enthusiasm for your mission and teaches Biblical stewardship principles that apply to all of life.
+ Congregational loans are not the same as home mortgages. – Many congregational leaders have little experience with the preparation and paperwork needed for congregational loans, which may be more like commercial loans than the mortgage you have on your house. Get the early advice in the next paragraph.
+ Make debt analysis an early part of your ministry plan. – One of the mistakes I see congregations make is waiting until all their plans are in place before they get advice on how to structure the payment for those plans. At that point, congregations are tempted to take on more debt than they can afford or to scrap the plan because they don’t know the financial alternatives. An early conference with your LCEF District Vice President is essential. He or she is not there to push loans, but to partner with you in creating a path towards making your mission a reality.
Art Scherer, Stewardship and Capital Funding Consultant –Ministry Services, LCEF
Art is President Emeritus of the Southeastern District, LCMS, and a Regional Consultant in stewardship and capital funding for LCEF. Dr. Scherer is developer of LCEF’s popular Consecrated Stewards series and author of the new Gift of Joy Bible studies.