by William Mitchell
Although churches are not businesses, they need money for effective operation. They need money for their sound systems, maintenance of equipments and sometimes for expansion. All these responsibilities may not be easy to take care of using the church’s collections only. For this reason, the management might need to apply for church financing to access the money they need.
Since the minster is not a society that works for profit making reasons, it may be quite hard for them to show to a lender that they have ability to pay the loan in good time. This is the reason why access to the funds might be a bit difficult for most churches. This is some significant information that ministers can take into deliberation whenever they need funding.
When looking for financing, they will be required to provide financial statements that show how they are doing and how they will possibly manage to pay back the loan. Every religious institution must make sure that they keep good financial records that will come in handy whenever they are searching for funding.
After they have presented their financial statements, they usually are analyzed critically by the lenders to determine the money they are able to qualify for. The lenders will later provide them with a list of different offers they can provide so that they can pick the one they feel is the most favorable. They will also be given the best repayment plan.
Loans can have either a positive or a negative impact on the financial state of the institution depending on how they are taken. There are certain mistakes that the management must avoid to make sure that they only mange to benefit from the loans and not lose instead. The following are some of the most common mistakes that many ministries make that lead them to financial trouble.
One common mistake that is always made by ministers is rushing to apply for the loan before the society is ready. Renting the grounds for prayer may seem very costly so the minster might choose to rush to get money for building one. Though this is a worthy decision, it must be made only when there is monetary capability so that difficulties can be evaded. They ought to be able to easily pay the loan.
Most churches also make mistakes of not taking the hiring process seriously. Because this is not a business, they may feel like there is no need to spend their resources on a good accountant who will make sure all the funds are well managed. Some churches take someone from the congregation to take care of this responsibility as opposed to hiring a professional thus leading to poor management of funds.
To sum up, these organizations are advised to always take the savings of the church seriously. Though it is not a commercial organization, the funds ought to be taken care of like it is. There should be regular assessments done on the funds to trail how the finances are being used and to prevent misappropriation of money.
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