Top 10 Questions about the
Refinancing of our Church Loan
May 9, 2012
1. What is the history of our current loan?
Our current ECCU (Evangelical Christian Credit Union) loan of $2,000,000 was
taken out on May 25, 2007 and matures on June 1, 2012. The interest rate is
6.75% and was amortized over 30 years with a 5-year balloon payment.
Small business loans (commercial loans) are very different than home loans and
a 5-year balloon payment is the most common term and usually the least
expensive type of financing.
If you're new to the church you might be interested to know that our current loan
was taken out for three primary things:
o To refinance the existing loan
o To pave the west parking lot which though adequate for our purposes at the
time, but was considered “temporary” by the City’s standards and had to be
brought up to code.
o To develop our wonderful plaza and entry
2. What is the status of expiring loan?
Our current balance is approximately $1,440,000 -- so in 5 years we've been able
to pay down the principal $560,000 which is AMAZING!
3. What was the process of obtaining a new loan?
Shortly after Walt, our executive pastor, arrived in 2009 he explored the idea of
refinancing the loan early but after reviewing the costs, did not find the terms
acceptable for an early refinance.
In the Fall of 2011 the elders commissioned Walt to put together a team of
financial experts to pursue the best possible term for refinancing our loan.
Our task force included:
o Dennis Grimes, E.A. (financial and tax consultant)
o Jay Zercher, CPA
o Kevin Gillespie, Attorney (specializing in complex real estate and lending)
o Walt Pitman, Executive Pastor
Utilizing their extensive network of contacts and researching new ones, 16
significant contacts were made which led to 10 competitive loan offers. Trinity
Church was universally viewed as a “very good loan” and lenders wanted our
After submitting their best offer, the list was narrowed to two strong bids.
After further negotiation, the task force submitted to the elders what was
unanimously agreed was our best offer. The elders agreed and voted, again
unanimously, to refinance our existing loan with CCCU (Christian Community
Credit Union) based in San Dimas, CA.
4. Why did the task force select CCCU?
The most obvious reason is that they simply gave us the very best rate available
after computing the interest rate, loan fees, and banking fees. Plus, after the pain
of converting to a new organization (which is true of any change), our day to day
operations are nearly identical to our current situation.
In addition, CCCU is a faith based, not-for-profit organization as opposed to
banks. While being faith-based was not an essential criteria in our final decision,
CCCU demonstrated a significant understanding of our unique church
lending/banking issues, and tailored their proposal to accommodate our specified
needs. This is an area where, to the credit of CCCU, the best business decision
was also a strong missional fit.
CCCU has invested its earnings in expanding Christian ministries for over 50
years whereas a bank can invest in places that we would not agree with.
Since 1995, CCCU has donated more than $3 million to missions and ministry.
5. What are the terms of the refinanced loan?
On April 24, 2012 the Loan Committee of Christian Community Credit Union
granted Trinity Evangelical Free Church conditional approval of a First Trust
Deed Loan in an amount up to $1,440,000. All real property and improvements
owned by Trinity Evangelical Free Church including, but not limited to, 1551
Reservoir Road, Redlands, CA 92374 will serve as collateral for this loan.
The interest rate is fixed at 4.00%. That's an amazing reduction of 2.75% over
our existing loan!!!
The estimated Principal and Interest payments of $7,600 is based on a 25-year
This loan has a 5-year balloon and will mature June 1, 2017. Refinancing will be
needed then unless the loan is paid in full.
There are no pre-payment penalties.
Estimated Loan Fees:
o $3,600 - Loan Fee (.25 Point)
o $500 - Flood Certification, Property Tax Service, Overnight and Wire Fees
o $2,000 - Title Insurance and Recording Costs
o $3,500 - Appraisal Fee
6. What does our church constitution require in order to
finalize this loan?
Our constitution says, “the authority of the congregation will be considered
delegated to the elders except for … the assumption of indebtedness in excess
of ten percent of the annual budget…”
While this has historically been understood as obtaining a new loan greater than
the existing loan, both CCCU and the church leadership thought it wise to include
the congregation in the final decision.
7. When is the Special Congregational Meeting?
We will be calling a short Special Congregational Meeting in each of our three
services on May 20 for a formal ballot vote. Only official members can cast a
ballot. A simple majority vote of those members present at a congregational
meeting will pass the motion.
The motion will read as follows. “With a quorum present, it is motioned that we
request a loan from Christian Community Credit Union up to a maximum amount
of $1,440,000 for the purpose of refinancing our existing loan which matures on
June 1, 2012. The collateral for this loan will be the church property located at
1551 Reservoir Rd, Redlands, CA 92374.”
8. What happens if the new loan is voted down?
That’s pretty simple -- unless someone wants to donate the balance due before
June 1, we go into default and “bad things begin to happen.”
Anyone want to donate $1,440,000 ?!?!?!?!
9. Wouldn't it be great not to have a loan?
Yes, it would be great if we didn't have the burden of the loan but we need to
keep in perspective that this very loan has helped Trinity expand its ministry over
the years! Our loan has helped us fulfill our mission statement which says:
We are a community of Christ-followers longing to glorify God by…
o Loving God
o Loving people
o Sharing the gospel, and
o Serving the world
Over the years our existing buildings, made possible by our current loan and the
sacrifice of hundreds of families, have helped Trinity Church to expand its
ministry. Men and women; boys and girls have come to a saving knowledge of
Jesus and grown in their faith! Incredible life change and transformation has
Because our Building Fund is considered a “designated fund” (separate from our
General Fund) every dime contributed to it goes exclusively to paying down the
mortgage and other building needs.
Even though our monthly payments will decrease with this new loan, the task
force and elders agree together that our desire is to pay down the new loan as
much as possible in the next 5 years. Therefore, our plan is to devote the funds
that come in over our regular month payment to reducing the principal. Given our
current terms and rate of giving to the Building Fund, that could be approximately
$2,700 every month going straight to paying down the principal. That’s incredible!
It should be noted however that over the last 4 years the Building Fund
contributions have decreased approximately 33% as some families have moved
away from the area, pledges were fulfilled and not renewed, or financial
difficulties prevented the fulfillment.
We have not had a capital campaign since the end of our last one in December
2006, so if you are a new family, you may not even know of this need or
opportunity to invest in the future by giving in this way.
The leadership would like to challenge the congregation to even exceed these
expectations and give, over and above your normal giving to the General Fund,
and help us pay down the loan as soon as possible! The sooner the loan is paid
off, the sooner ministry can expand!
But I see all the red ink in our General Fund – could that extra money be better
used there? Well the answer is yes and no – both uses would be good, but the
wisdom of the elders’ years ago was to establish two separate funds. Therefore,
money given to the Building Fund is treated like designated giving and cannot be
used for operational budgets or personnel salaries.
10. What can I do to help make this loan a reality?
Pray for wisdom and direction in this, and all the decisions by the elders and
senior leadership, that affect the future of Trinity Church.
Attend the meeting (at one of the 3 worship services May 20) and vote.
Prayerfully consider financially contributing to the Building Fund so that we can
significantly pay down this loan, or even pay it off should the Lord so provide, in
the next 5 years.
“Remember this: Whoever sows sparingly will also reap sparingly, and whoever
sows generously will also reap generously. Each man should give what he has
decided in his heart to give, not reluctantly or under compulsion, for God loves a
cheerful giver.” II Corinthians 9:6-7
Feel free to ask any questions you may have. You can speak to anyone on the
task force, and any elder, but the most accessible person is probably Walt
Pitman, our Executive Pastor. You can contact him by email
firstname.lastname@example.org or by calling the church office at (909) 335-7333, x113.