When a church needs a loan, say, for remodeling, borrowing from The Baptist Foundation of Alabama means the interest paid will be reinvested in Kingdom causes.
For more than 30 years, The Baptist Foundation of Alabama has offered limited loans to Alabama Baptist churches, most often to church plants, but TBFA recently expanded its loan offerings to include new construction, remodeling, property purchases and refinancing to all Alabama Baptist churches and ministries, regardless of age or size.
“A ministry-based lender differs from a typical bank because we only offer loans to churches and other nonprofits that share the same biblical beliefs,” John Ashworth, TBFA’s president, told The Alabama Baptist.
With a long history of serving Alabama Baptist churches and ministries, TBFA understands the unique needs of churches and “is very familiar with church leadership and committee structure,” Ashworth said.
Another component of biblically-grounded lending is a scriptural understanding of debt, he said.
“The Bible doesn’t forbid debt but instead cautions its use,” Ashworth said. “When discussing a potential loan with a church, we employ conservative guidelines that seek to ensure a congregation doesn’t borrow more than it can afford.”
Loans are available to all Alabama Baptist churches and faith-aligned ministries, “which would include Alabama Baptist ministries and evangelical organizations that are like-minded with the Baptist Faith and Message,” Ashworth said.
In addition to understanding the operational and governance structure of a church, TBFA knows how to work with church finance committees, building committees, trustees and pastors, he said.
“We serve ministries, and we are genuinely interested in helping churches reach their God-given vision for reaching their communities,” Ashworth said.
As an example, The Foundation limits the ratio of the debt payment to tithes and offerings a church receives to ensure the church can comfortably handle the payments.
“This helps churches have capacity to do the ministry God has called them to do,” Ashworth said. “When you consider staff and utility costs, debt payments and mission commitments, we understand a church needs to have money left to do the ministry God has called them to do.”
The Foundation considers the interest rates it offers to be highly competitive, and it tries to keep rates in line with or lower than what banks are offering on similar terms.
“In addition to competitive interest rates, our closing costs are very low compared to banks, plus there are no prepayment penalties or appraisal requirements,” Ashworth said.
Instead of appraisals, The Foundation looks at the insured value of the property or the cost of construction to draw a collateral value.
“We also forgo survey requirements and construction draw inspections,” Ashworth said. “The local church committee and staff are typically aware of construction progress and provide documented evidence of that progress on draw requests without the added expense of a third party that is typically required by a bank.”
A highlight of loans through TBFA is how interest is reinvested in Kingdom causes. The opportunity stems from The Foundation’s offering of CD-like investments to churches and ministries that are then used to provide loans to congregations.
“The interest these borrowing churches pay on their loans provides the return that we pay to the churches and ministries that may have invested with us,” Ashworth said.
Churches should consider seeking loans through TBFA, he said, because its mission is to help Alabama Baptist churches and ministries unlock more financial resources to do more ministry across the state and around the world.
“By offering loans that may save churches money and where the interest paid is returned to ministry, we can do exactly that,” he said.
More information is available at www.tbfa.org/church-loans, and interested churches can begin the application process there.
In addition to offering loans to churches, The Baptist Foundation of Alabama has worked since 1940 to help Alabama Baptists “generate more resources for more Kingdom work.” TBFA manages more than $300 million of ministry-fueling investments, the website says, and facilitates estate planning ministries in churches.
The Foundation also manages more than 100 scholarship funds for Alabama Baptist students pursuing educational degrees and helps churches with vision campaigns and online giving.
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