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What Is a Congregation Loan?

July 25, 2018 | Posted by Paige Cissell

When European immigrants came to America searching for religious freedom, they needed to find spaces where they could practice and teach their faith. They also needed to determine how to finance the development of church and school facilities.

The solution was to establish an internal financing program in which members of the church would directly invest money in a central fund. Since our forefathers were of Germanic background, they referred to this fund as their “Kirch-bau-kasse,” which means “church building fund.”

In 1902, the fund began with just a $400 capital grant. From that point on, the fund grew tremendously thanks to investments from organizations and individuals.

Types of congregation loans

It is an exciting time when a congregation decides to make improvements to better its church for the present and the future.

A congregation’s wish to renovate, add-on or even purchase new property is a significant endeavor that requires not only financial guidance but planning and development aid as well.

A congregation loan is a loan that provides new and existing congregations with the means of reaching its improvement goals while being financially responsible and extending the mission of the church.

There are a variety of loans that are specifically meant for church improvement. Think of a Congregation Loan as an umbrella. Under this umbrella are different categories of loans that follow a project throughout its entire timeline. It is important to understand what sets each of these loans apart to determine which is best for your organization.

Let’s lay out the main differences and purposes of these loans.

Secured loans

Secured loans are loans you take out on something you have ownership of, like a house or a car. The lender uses this as collateral and holds the title until the loan is paid back entirely.

Types of secured Congregation Loans include:

  • Construction Loan: Used for the construction of new buildings or renovations to an existing one. These loans are efficient and save time and money because they only have one closing.
  • Jump-Start Loan: Support the expansion of existing ministry and the introduction of a new ministry.
  • Soft-Cost Loan: Used for design, architecture and engineering costs before construction.
  • Line of Credit: Used for short-term needs and any discrepancies in the budget.

Unsecured loans

Unsecured loans are a bit simpler and easier to get than secured loans.

These loans are taken out without having to use anything of value as collateral. Unsecured loans typically have a fixed term and interest rate that does not change throughout the term of the loan.

With LCEF unsecured loans, a congregation can borrow up to $100,000 with a maximum term limit of 15 years.

Congregation loans through LCEF

LCEF is pleased to offer all the above loans with competitive interest rates and closing costs. Learn more about LCEF’s Congregation Loans.

Paige Cissell
I’m Paige Cissell, LCEF’s Marketing Intern this summer! I am a junior at the University of Missouri majoring in Journalism with an emphasis in Strategic Communication. I love traveling, writing and spending time with my family and friends.