Low Interest Rates for Churches Borrowing Money

With interest rates and building use both at historic lows, 2021 could be a great time for your congregation to tackle deferred maintenance or make a capital improvement that gives your ministry room to grow. 

“We’ve been making these loans for 28 years, and today’s interest rates are the lowest we’ve ever been able to offer,” says Faith Foundation’s executive director Tom Wilson. “We’ve always set our interest rates by adding half a percent to the Morgan Stanley prime rate, and as of today, that puts us at just 3.75%.” 

Faith Foundation has offered loans for church capital improvement projects since 1992. “I started the loan program because at that point, banks were asking pastors to co-sign loans for their congregations, and in an itinerant system that just didn’t make sense,” explains Wilson. Traditional banks also tend to charge high origination fees, require financial reports in different formats than the ones prepared for the conference office, and set higher interest rates because they perceive the trust clause as a risk. “We wanted to support churches by taking away those barriers,” Wilson says. “Faith communities should be empowered to make the improvements they need to grow.” 

To date, Faith Foundation has approved 191 church loans, making a total of $28.5 Million in capital available to grow local ministries. And, although each loan requires a first mortgage position, the Foundation has never foreclosed on a church, preferring instead to work with leaders during times of financial hardship to temporarily adjust their payments. At the beginning of the COVID-19 pandemic, for example, several borrowers were able to switch to interest-only payments for a few months. 

Current loan holders will also eventually benefit from historically low interest rates, because Faith Foundation reviews each loan’s rate of interest on a three-year schedule, adjusting if rates have changed to the current Morgan Stanley prime rate plus half a percent. All the interest income received by the Foundation goes directly into the earnings of the Stable Value Portfolio, benefitting other congregations and agencies in our episcopal area who have chosen this socially responsible option for their rainy day funds. It’s a win-win situation. 

Discerning whether this program might benefit your church? You can view the loan guidelines and application online. Call us at (800) 488-4179 with any questions.