Other Lending Policies
Loan Interest Rates & Maturity Limits
Collateral Requirements
Loan Fees
Other Lenders
Under normal conditions, Church Extension will not loan funds if funds are also borrowed from other sources. Exceptions, including "participation loans," may be approved at the discretion of the Board of Directors.
Key Person Insurance
A borrowing congregation, as a condition of the loan, will be required to provide key person insurance on the life of the senior pastor, for which Church Extension is both beneficiary and owner of the policy where 1) the loan is to be at least $1 million, 2) the proposed loan represents the borrower's maximum debt capacity, and 3) the tenure of the pastor is key to the success of the congregation over the next three to five years. Key person insurance must be for an amount that will cover at least two full years of loan payments.
Subordination
Loans are not subordinated to other lenders.
Loan Refinance
Borrowers may refinance existing loans for the purpose of reducing the loan interest rate upon payment of a fee equal to 1% of the outstanding loan balance. The fee may be paid in cash or may be added to the outstanding loan balance. Refinanced loans of this kind are approved as an adjustment in loan terms which may establish a new interest adjustment term, amortization schedule and monthly payment. Refinanced loans become effective on the first day of the month following the adjusting action. Loans supported by investments may not be refinanced unless the supporting investments are also adjusted or reissued accordingly.
Loan Commitment Expiration
Approved loans, evidenced by a letter of commitment, will be valid for twelve months. If all requirements for making the first advance have not been met within that time, the borrower may request an extension of the loan commitment for an additional period of up to six months. The interest rate for any loan commitment extension will be the then current loan interest rate. If requirements for loan disbursement have not been completed by the end of the extended commitment period, loan approval is withdrawn and the applicant must then submit a new loan application.
Financial Statements of Borrowers
Borrowers are required to provide annual financial reports to Church Extension, so long as the aggregate balance of all Church Extension loans to the borrower remains greater than $250,000.
