When a loan is more than a loan.
Ailee Taylor, wife of church planter Derrick Taylor, explains their experience with BFI’s loan program in securing their church building in Staunton Illinois.
For almost a decade, BFI has been providing low cost, easy to apply for church loans for construction or other capital projects. The source of our loans determine the rate. In most cases, the loans are for a 20 year amortization and no “balloon” payment is required (i.e. permanent financing).
Sub $50,000 Loans
Ideal for church projects that are smaller in nature, such as a remodel, church parking lot, or re-roof. Funds are loaned from BFI’s general endowment and the interest rate charged matches the current interest production in the endowment (currently 5.35%). Amortization terms are generally shorter (i.e. 5 to 15 years).
$50,000 to $1,000,000
This range matches the majority of construction loans for Baptist churches in Illinois and are financed with BFI bonds. This allows the majority of interest to be returned to other Baptist churches and individual investors. BFI has used this program to help construct, refinance or purchase buildings for approximately 25 churches and roughly $9,000,000 has been invested by Illinois Baptists to support these projects. Currently, rates are 5% fixed for 5 years. The loan may adjust a maximum of 5% over the life of the loan and no more than 3% upon an anniversary date.
BFI services all bonds without charge and the church, while encouraged to help in the bond issue’s promotion, is not involved in direct “sales” of the bonds themselves.
$1,000,000 +
For loans in this range, BFI may partner with our sister foundation, the Baptist Foundation of Oklahoma. The application and the underwriting process is the same (we actually use the same application form). BFI may “participate” in this loan through BFI bonds raised exclusively for the project.
All BFI loans are secured by a first position mortgage on church property. We use a 50% loan to value maximum ratio (i.e. the church must have property that would cost twice as much as the loan to replace) and a 25% debt to income ratio (i.e. the church must have unrestricted gift income sufficient that the loan payment does not consume more than 25% offerings). The complete application may be downloaded here. The BFI loan committee of the Board of Trustees typically meets to consider giving conditional approval approximately two weeks after receipt of loan applications.