If a church building or renovation project is in the $1-million-or-greater range, church leaders may want to consider financing the project with bonds.
"Churches are still finding it more difficult to get a loan than it was several years ago," reports Martin Northern, vice president and branch manager of Great Nation Investment Corp., an Amarillo, Texas-based investment banking firm that specializes in church financing.
At the same time, with interest rates at historic lows and many investors looking to put their stock earnings from the recent Wall Street highs to work in fixed-interest investments, "There is more demand for bonds than there is supply available," Northern reports.
That helps make bonds a better and more economical way for many churches to finance long-term capital projects, according to Northern. And as opposed to conventional loans, which typically have adjustable interest rates and shorter terms, the fixed-rate nature of bond financing protects the church from fluctuations in interest rates [over] a 20- to 25-year period.
[Editor's note: Want more tips from church finance experts? Watch for "Dusting Off Construction Papers," an exclusive report in the Summer 2013 issue of Worship Facilities Magazine.]