Now is a Great Time to Evaluate Your Financing Options for Church Mortgages!

Church Mortgages for Ministry and Growth

Church is an affiliate website of Share Financial, which has been specializing in church mortgages and non-profit finance since 1970. With over 40 years of experience helping our clients weave through the ins and outs of church mortgages, and the ups and downs of the ever-changing financial climate in America, our focus remains centered on securing the most reliable, economical, long-term, fixed-rate financing available.

Church Mortgages for Expansion

Whether your church or non-profit organization needs to purchase land, construct a new facility, expand your current facility, renovate your current facility, relocate your current facility, purchase a facility, or refinance your current indebtedness, our specialists at church can meet your needs.

After assisting more than 1,050 churches and non-profit organizations, our investment-banking firm continues to bring valuable financing options to our clients.

Refinancing Church Mortgages

Considering our weakened economy, a shortage of church lenders, uncertain financial times, and the risk associated with variable rate financing, ministries “on the grow” must carefully examine their financing options when they find themselves in need of capital funding. And although the general underwriting criteria for loans of every kind have tightened, lending rates are at 60 year historical lows. So now could be the best time to consider moving forward with a new loan from church

Years of experience and due diligence with church mortgages have allowed us to continue to assist the church and non-profit organizational community. In spite of the recent economic downturn we remain strong, viable and available to those who have capital investment needs.

Having financed church mortgages in excess of $805,000,000, we have arranged transactions up to $18 million dollars, yet our average financing is $2.5million. At Church we look forward to the opportunity to assist with all your financing needs.

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What is a Bond Program?

Bond Programs Explained

A bond program is a financial vehicle by which a church or non-profit organization can construct a new facility to house its ministry, can expand its current facility, can renovate its current facility, can purchase an existing facility, or refinance its current indebtedness.

A bond program utilizes church bonds to accomplish the church’s capital needs. Church bonds are debt securities or other evidences of indebtedness of the church which obligate the church to repay a stated principal amount and to pay interest to investors. The bonds are typically issued in series with various specified maturity dates and interest rates. A disclosure document, the prospectus, provides investors with material information about the church and its offering of church bonds.

A bond program allows church members, family members, and friends of the church to invest in the capital expansion of the church with funds that cannot be given to the church but can be loaned for a specific amount of time. Church bonds generally pay more interest than some other investment vehicles so that the investment benefits both the church and the investor.

A bond program is conducted by the financial institution underwriting the bond issue. A registered representative of that firm informs the potential investor as to what a bond is, how it works, what bonds are available for investment, what backs the investment, how the investment is repaid, and how much the investment will earn. This process is not the responsibility of the church but of the underwriting financial institution.

Similar to church mortgages a bond program allows the church to obtain a long-term, fixed-rate interest rate on its loan from the bondholders. A bond issue can be obtained for up to 25 years.

A bond program allows the investor to obtain an investment of six-months up to twenty-five years depending on the investor’s financial need. There are maturity periods every six months over the life of the bond issue.

A bond program pays a competitive interest rate in today’s current economy. The longer an investor waits for his principal to be returned, the more interest the investor will earn. The bonds are, however, subject to early redemption by the church, and investors have no right to require the church to redeem any bond before maturity.

A bond program provides two investment choices in bonds. A compound interest bond allows the interest to compound every six months until maturity. The investor receives no interest until the bond matures (or upon early redemption), at which time the principal and accrued interest are paid to the investor. A simple interest bond allows the interest to be paid each six months until maturity or early redemption, when the last six-month interest and the entire principal are paid.

A bond program is secured by a first mortgage lien on the church’s property and building(s). It is much like a mortgage on a person’s home. The character of the pastor and leadership, the cash flow of the church, and the collateral value of the church’s facility are the strengths of the bonds that the investors purchase.

Certain risks are associated with investment in church bond offerings. Potential investors should carefully consider the risk factors as set forth in the prospectus for the offering. Outlined below are certain selected risks associated with church bond offerings in general:

  • The issuer (the church) is dependent on voluntary contributions for its operation and for payment of the principal and interest of the bonds of the offering. There is no assurance such contributions will increase or remain stable. Failure to achieve an anticipated amount of contributions could adversely affect the issuer’s abililty to repay the bonds.
  • Properties that serve as collateral for church bond offerings are for the most part special purpose facilities for which there may be a very limited market. There is no assurance such properties can be sold for stated values.
  • If the offering involves the construction of new facilities and such facilities are not completed as anticipated, the value of the property that serves as collateral for the bonds could be adversely affected as well as the issuer’s ability to repay the bonds.
  • There is no secondary market for the bonds nor are the bonds rated by any nationally-recorgnized statistical rating organization.
  • The bonds are subject to early redemption by the issuer. Investors have no right to require the issuer to redeem any bond before maturity.
  • The issuer’s senior minister/pastor typically serves a significant role in the leadership, management, growth, and viability of the issuer as a church, and the loss of such person’s services could have a material adverse affect on the issuer’s ability to repay the bonds.
  • There are no income tax benefits upon the purchase of the bonds.
  • When bonds are sold on a best efforts basis, there is no assurance all bonds of the offering can be sold and all purposes of the offering completed in full.

There are other risks to be considered that are more fully described in the prospectus for the offering. Investors should read the prospectus carefully before investing and consider any potential investment based upon their individual financial situation, investment objective, and risk tolerance.

A bond program is a viable financing vehicle for churches and non-profit organizations.

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Money Never Sleeps

Money never sleeps.  It may be cliché but at Church we believe money either works for you or against you.  No one is ever sorry that he/she saved money.  Making the right investment only makes saving money better.  The only regret some have is that they did not begin saving/investing sooner.

Below are listed some worthy reasons to being investing as soon as possible:

  • Education of children or grandchildren
  • Independence in retirement
  • Investment in an estate or trust
  • Achievement of a special financial objective
  • Contributing to a tax-deductible Individual Retirement Account (IRA)
  • Competitive return on current savings
  • Desire to help one’s church or non-profit organization reach its financial goals
  • Support one’s personal, spiritual, and eternal values
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Advantages of Bond Financing

As an option to traditional church mortgages, bonds provide the most flexible and economical financing plan for the church or non-profit organization.  Interest rates are fixed, not variable, for the life of the debt.  The payment structure is tailored to the needs of the church without jeopardizing ministries.  Equally important, an independent trustee on behalf of the members and friends who purchase bonds holds the mortgage securing the bonds.  Interest on the bonds is paid to those same investors through the same independent trustee.  After evaluating the options, most churches conclude that bonds are the best option for financing and provide the best stewardship for the ministry.  The following will explain some very important reasons and advantages of using bond financing:

  • Bond financing allows members and friends of the church to invest in harmony with their personal and spiritual values.
  • Bond financing eliminates any need for interim or construction financing, which only adds to the time the loan is repaid.
  • Bond financing generally has lower interest rates over the long term – producing substantial savings over time – since most institutional loans do not offer fixed-rate interest rates for twenty or twenty-five years.
  • Bond financing allows the interest paid by the church on the loan to go to members and friends of the church – good stewardship.
  • Bond financing permits the members and friends of the congregation to support the church’s ministries by investing assets that they cannot give through tithes and offerings.
  • Bond financing fixes interest rates throughout the loan.
    • Bond financing lets the church know what its monthly payment will be the first month as well as the last month of the loan.
    • Bond financing gives the church the ability to structure the loan in a way that maximizes the church’s future options.
    This information does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any state in which such offer, solicitation, or sale is not authorized. All offerings are made by prospectus only. Certain risks are associated with investment in bonds of this type of offering. Investors should read the prospectus carefully before investing and should consider any potential investment in view of their own investment experience, risk tolerance, and available investment capital.
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    Banks in Gridlock

    Are banks the solution to the problems in the financing industry, or are they the problem?

    “For business owners, the current process for obtaining commercial mortgages and other commercial financing has become a quagmire of frustration and confusion…..”

    Click here to see original article

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    VP of Mortgage Bankers Association testified before the Congressional Oversight Panel

    MBA Executive testifies that commercial real estate loans are doing well when compared to the banking industries overall loan portfolio……..

    “Before discussing the state of commercial real estate markets, I think it is important to clear up a few myths that have taken hold in discussions about commercial real estate. The first is that banks are being excessively weighed down by their mortgages on commercial and multifamily properties, and the second is that there has been a looming wave of loan maturities threatening the system…..”

    Click this link for original article

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