ADF Loans
It's okay to mortgage buildings – it's not okay to mortgage ministry.
Frequently Asked Questions
What sets ADF apart from other lenders?
- Spiritual health – We are concerned about the spiritual health of your church (not just financial health).
- We're “family” – ADF will only make loans to Alliance churches and auxiliary ministries, and the money used to fund these loans comes only from Alliance family members and friends. We understand what makes you tick – we share your “heartbeat.”
- Kingdom priorities – Our priorities in lending reflect the denomination's passion for church planting. While commercial banks will give less favorable loan terms to new and small churches because of the perceived risk, ADF assists startup churches and those purchasing their first worship properties with its most favorable terms.
- We'll be there for you – To most commercial banks, you are nothing more than a source of revenue. If your ministry falls on hard times, a bank will do whatever is necessary to protect its investment. At ADF we have a fiduciary responsibility to protect our investors' money which funds church loans, but we also have a strong desire to see your church fulfill its God-given mission. Therefore, we go the extra mile to help churches make it through difficult times. ADF has never foreclosed on a church loan – a testimony to our desire to see our churches succeed.
- Financial savings – ADF charges no loan fees*. Furthermore, we rarely require a commercial appraisal to be done, resulting in significant savings. And, of course, our desire is always to provide the lowest interest rates that we possibly can. ADF's rates are competitive and, in many cases, have been much lower than what commercial banks could offer.
* While ADF does not charge any fees, there are costs associated with loan closings such as title insurance, recording fees, mortgage taxes, etc. You should contact a local attorney or title insurance company to calculate these fees.
You're more than a customer – We consider ourselves your partners in ministry. The ADF staff takes a personal interest in the ministries of the churches we serve. In fact, our staff regularly prays for our churches.
What can an ADF loan be used for?
All loans must be real estate related and can be used for purchasing, refinancing, renovating, or new construction. This includes unimproved property for future church sites, church buildings, church offices, parsonages, and property owned by districts and other Alliance entities. ADF will also provide loans for some of the up–front costs of construction (architect fees, etc.) as long as suitable real estate can be provided as collateral. Furthermore, if a church already has an ADF loan or is applying for one, it is possible to get a loan for furniture and equipment used within the facility that is being used as collateral for that loan.
What financial qualifications need to be met?
ADF requires that each borrower have 20 percent equity in the property used for collateral. This can be in the form of cash or a conservative estimation of market value beyond the amount of the loan request. If the church does not have 20 percent equity in the subject property, other debt–free property can be used as additional collateral.
The church or ministry must be able to demonstrate from its previous year's financial history its ability to make the projected monthly loan payments. This is accomplished by a careful analysis of net operating income, ongoing building fund income, the impact of capital fundraising pledge income, and other relevant variables such as lease income. Projected growth in church budgets is typically not factored into loan qualification.
ADF believes that a church or ministry's debt service should not exceed 35 percent of its operating and building fund income. Ideally, loan requests should not exceed an amount equal to three times the church's operating income.
What are typical loan terms?
Most loans made by ADF have annually adjustable interest rates. These rates are based primarily on ADF's internal cost of funds and, therefore, tend to be more stable than commercial loan rates. ADF also offers three– and five–year fixed rate loans at slightly higher rates. At the end of the fixed–rate period, these loans convert to annually adjustable loans.
ADF offers 15– and 20–year loans with corresponding amortizations. Other loan terms are not affected by the maturity option selected. For construction projects, ADF allows the church or ministry to make interest–only payments until the final loan draw is taken, at which time the 15– or 20–year amortization begins.
Special loan terms may be available for startup churches obtaining vacant land for a future church site. These terms are designed to greatly reduce the loan payments for the first five years, allowing the new church to obtain property without putting a strain on its budget. If interested, contact ADF and inquire about a District Land Purchase Loan.