DevCo vs. Bank Commercial Loans
Church loans are not a residential mortgage. Many times, we have heard church leaders inquire about the church receiving a 30-year mortgage loan. Since a church mortgage loan is considered a commercial loan, it’s structured differently. When seeking a property acquisition or new construction loan, church leaders are encouraged to compare loan terms and conditions between banks and the Virginia United Methodist Development Company (DevCo). You will discover that commercial loans usually have a 30-year amortization with a fixed interest rate for five or 10 years. Since payments are amortized over a longer period of time, it allows the church to enjoy additional cash flow that can help support other ministries within the church and throughout local communities.
Depending on the amount of your loan request for a DevCo commercial loan, churches may not be required to pay origination fees, document fees and other related costs. In most cases, an appraisal is not required. In addition, DevCo offers an amazing opportunity for the church to “self-fund,” the loan. What is “self-funding?” Self-funding is a DevCo term for allowing our investors, to use their DevCo investments, to lower the interest rate on a commercial loan. The church’s stated interest rate can be discounted with investments made by the church, individual members, and other affiliated entities. This program provides another opportunity for churches to lower interest rates on their loans. Each month, the value of all designated investments, are calculated and the interest rate is adjusted according to the “Deposit to Loan” (DTL) schedule. At this time, no banks are offering this benefit!
Recognizing the need to maximize your stewardship, it’s important that your church seek the best possible loan rates and terms. When you evaluate banks’ offers versus DevCo’s, you are encouraged to consider the value added by DevCo’s DTL program. In addition, the church will enjoy DevCo leaders’ expertise and strong relationship that’s established throughout the life of the loan. We sincerely understand the importance of churches having a mission and goal to enhance their ministries. We will continue to serve local churches through our lending efforts and focus on helping you to plan and prepare ministries into the future!
To learn more about the self-funding program and other unique loan options, contact us today!
