Long-term Assets Should Employ Long-term Financing.
Most conventional lending institutions rarely offer churches fixed-rate loans for longer than five (5) years even though the payment may be based upon a 20 to 25 year amortization. However, Bond Financing is an excellent means for churches to obtain true, long-term financing! If your church intends to finance its mortgage or construction project for the long term, we believe locking in a fixed interest rate and fixed payment for the ENTIRE life of your loan is the wisest and best way to go! Bond Financing provides a fixed interest rate and fixed payments for the life of the bond offering.
Protect Yourself From Interest Rate Risk.
ANY budget contains two primary elements; fixed costs and variable costs. The better a church or non-profit organization defines its fixed costs, the easier it is to identify the amount of funds available to pay for existing and new ministries or programs. Your mortgage payment is a major and very important element in defining your church's or organization's fixed costs. Whenever a non-profit uses a short-term loan (typically called an "adjustable rate loan") to finance its long-term mortgage, it is gambling that its interest rate and payment will not change whenever the loan comes up for renewal. Adjustable rate loans provide for an interest rate adjustment (either up or down) on the renewal date. Any adjustment is based upon the interest rate environment at the time of the renewal. The question to ask is: "Where will interest rates be in three or five years when your loan renewal comes up?" This is why we call it gambling because no one really knows the future of interest rates. The interest rate on your bond offering is fixed for the life of the bonds, period.
Ministries are the Key to Church Growth, NOT Buildings.
The Hollywood movie ‘Field of Dreams’ was based upon the statement, “Build it and they will come”. When analyzing church growth, that simply isn’t true. Church buildings are important, but without your church’s life-changing ministries, buildings are just buildings. Many of our church clients were holding 3 or 4 Sunday morning church services prior to expanding their facilities!
Never, never enter into any loan arrangement before checking to see if there is a "Prepayment Penalty" clause in the loan agreement! Bond financing through Great Nation Investment Corporation NEVER includes a prepayment penalty.
After determining the optimum method of financing for your project, select a finance company who will be more than just a lender, but who will offer you analyses and counsel for achieving your goals!