I would like to take a second to address one of the key questions we are currently being asked; "How does the present state of the economy affect the Church financing market?" This question can be addressed through understanding a number of key points.

1) The local, regional, and national financial institutions that do not specialize in Church loans (i.e financial institutions that also make loans in the residential and commercial markets) have cut way back in the Church financing arena. This has been primarily caused by theseinstitutions taking a major hit in the residential market leading to a lack of liquidity and bad assets on the balance sheet. Another trend that seems to be forming is many of these institutions are heavily discouraging any type of leveraged growth for their current Church clients.

2) As many banks have shied away from Church financing more and more Church's are looking for financing through Christian Loan Lenders (i.e financial institutions that specialize in Church loans). This has afforded Christian Loan Lenders the opportunity to "pick out" only the best Church loans they are presented with to put on their books. For example, 6 months ago a Christian financial services company may of have 10 Church loans to choose from. Lets say out of those 10 there where 5 good Church loans and 5 mediocre Church loans and they had to do at least 7 of the 10 loans to meet their budget. Thus, they would be left with doing all 5 of the good Church loans and 2 of the mediocre loans. In today's market these same Christian Loan lenders now have 20 Church loans to choose from. Using the same 50/50 format as above, 10 of these loans are good and 10 are mediocre. As you can see, if the Christian Loan lender still has to approve 7 of these loans they are afforded the ability of doing the best of the good loans and none of the mediocre loans. 

3) LTV, LTV, LTV; In the past adequate debt service and coverage ratio could compensate for above average LTV ratios, not any more. LTV is the major concern for most lenders in today's market place. Although income ratios are still important most lenders want to see a church loan with an LTV of under of 70%.

4) Ministries looking for Church financing should NOT be discouraged by the current state of the economy and lending practices in America. When God has a plan, He will without a doubt make that plan become a reality. There are still plenty of funds available for Church's in the marketplace, they may just not be as easy to find as they used to be. That is the benefit of partnering with Church 1st Financial, with our experience and lending relationships we will make sure your ministry gets what it needs when it needs it.

www.churchfirstfinancial.org