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Preparing for a Loan

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delano Sherley

If you have tried to get approved for a loan lately, you probably discovered that it takes more time to complete and is a bit more difficult than it used to be.  Besides the added regulations that banks must now comply with, many banks still do not understand church financial statements. However, there are things that you can do to make the process easier.

First, provide the bank with properly prepared and accurate financial statements.  Depending on the amount you want to borrow, they may require independently prepared statements, which will include a statement of financial position, statement of activities and a cash flow statement.

Make sure you keep enough cash on hand.  Banks want to see that you have enough cash so that a snow storm on Sunday doesn’t mean you may be late on your next mortgage payment.  Ideally, keep enough cash on hand for at least two or three months of expenses.  Not only will the bank be happy, but you will have much less stress as well.

Plan on borrowing no more than 70% of the value of your property (also known as your loan-to-value ratio).

Following these steps will not only help the process for approval go smoothly, it will also help you get a better rate on your loan. Prior to approaching the bank, seek the help of an accountant familiar with churches to assist you.  By being properly prepared, you will save money in the long run.

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