April 18th, 2019
Church financing is a type of commercial loan that is specifically used for religious organizations. The type of church financing we offer generally differs from traditional commercial loans in a few important ways. Most of the church loan products we offer do not have personal guarantees. However, there are exceptions to this and circumstances where we do need personal guarantees. In general, a personal guarantee requires if the church cannot qualify for a loan based on its income but the leadership of the church still wants the loan. For instance, if a church can afford to borrow $500,000 on its own, but the leadership is looking at buying a property and $600,000 of financing is needed to close.
In most cases, the entire amount financed will be personally guaranteed, not just the amount over what the church can afford to borrow. There are times when a limited guarantee can be offered for either less than the full amount of the loan or a limited period of time or until some condition is met which makes the underwriter comfortable. For example, there are times when the underwriter might offer you the full amount of church financing you are requesting provided they receive personal guarantee(s) strong enough to make them feel comfortable. Such personal guarantees might drop off after the church reaches and holds a Debt Service Coverage Ration that makes the underwriter comfortable for a period of time.