Investment requirements and loan costs

If your church loan is originated with funds provided by the Presbyterian Investment & Loan Program's investors and banking partners, a minimum investment balance must be maintained throughout the life of the loan in order to receive the base loan interest rate.

Churches that are not new church developments (e.g., are 10 years or older), are asked to maintain a 20% or greater investment support level. Here is how that investment level is calculated:

At the end of every month, the amount of investment supporting a loan is summed. If the total - from any investment source - equals or exceeds 20%, the base interest rate is charged. If the total is less than 20%, the base interest rate plus 1% is charged.

The typical borrowing congregation generates more than 50% investment support during the first year of a loan. 20% of the outstanding balance of a loan is not a difficult threshold to meet and exceed. In the later years of a loan, most churches enjoy significant rebates.

The designation of an investment to support a loan does not change the interest earned, or its other benefits and risks. It provides a church you love with a better interest rate and the possibility of a rebate, year after year.

Here is an example: Faith Presbyterian Church has a loan for $400,000 that is funded 100% by investor dollars from the Investment & Loan Program. Fifty-two investors invest, from many churches around the country, and name Faith Presbyterian Church as the recipient of their investment's right of designation. The total invested by these fifty-two investors is $249,600. Since $249,600 is greater than 20% of the outstanding balance ($80,000) of the loan, the base interest rate is charged.

However, if Faith Presbyterian Church is the recipient of only $75,000 in investment support, the base interest rate is increased by 1%.

Sometimes, the base interest rate plus 1% is less than alternative loan options. In all cases, the church that has investment support in excess of 35% of the loan's outstanding balance - if it is funded by investment dollars - is eligible for a rebate.

New Church Developments are forgiven a portion of the investment requirement during the first three years of a loan. For more information, please contact the Presbyterian Investment & Loan Program today.