IN THE ARENA: Should Churches Embrace and Utilize Debt?  (YES)
IN THE ARENA: Should Churches Embrace and Utilize Debt? (YES)

By Matt Merold

There are benefits that come when a church uses debt. Rich and wise Solomon, who wrote some of the strongest warnings against debt, took out a 20-year loan of sorts to help build God’s temple (1 Kings 9:10, 11). Certainly the Bible cautions us about being in debt. Scripture describes what may happen if we borrow money and fail to pay it back. Most of the counsel about financial debt in Scripture paints a picture of the rich exploiting the poor. However, it doesn’t say much about those who calculate the cost, take out a loan, and responsibly pay it back. So, what are some of the benefits to debt? Consider the following:

 

A Church Can Capitalize on Its Momentum, Which Equates to Souls Saved

Most churches with forward momentum have a vision that exceeds their financial resources. A church with momentum usually sees attendance growth that outpaces their offering growth. It takes about 15 months for someone new to your church to start giving a recurring offering. I pastor with a church that was once landlocked and confined to a small, rural church building. As we grew, attendance maxed out our seating capacity, so we added services and made other adjustments to accommodate more folks. It was easy to see the building couldn’t handle the growth. The shoe was determining the size of the foot.

Leadership faced two options: (1) Do nothing and hope people felt comfortable sitting on each others laps or the stage steps during worship services, or (2) Relocate and build a church building that would accommodate the growing congregation. We determined that if we did nothing, we’d kill our momentum. We decided the church should utilize debt to keep up with the growth and capitalize on the momentum.

Had we waited in an effort to save money, we may have failed to reach any number of people. Instead, we’ve seen nearly 500 baptisms since we relocated and made room for more. The Bible cautions us about debt, and Jesus asks us to calculate the cost of saving a soul. The parable of the lost coin certainly grips the reader to think about the value of a soul who is unsaved. What is a soul worth to you? One dollar? One million dollars? Is one soul worth going into financial debt? We calculated that the debt was worth the cost of saving souls. Are you willing to sacrifice temporal finances so that more people will have an eternal security with God?

 

Securing Assets Now Is Usually Cheaper than Securing Them Later

If you’re saving money now to build later, you may be losing money in the long term. Let’s say you started saving in 2004 to build a 12,500-square-foot church building. In 2004 that building would have cost about $1 million (based on average construction costs at the time of $80 per square foot). Starting with a zero balance, your congregation manages to save $70,000 a year toward new building construction. At that rate, it takes a little less than 15 years to save $1 million.

Along comes 2019 and you finally have $1 million in the bank. “Let’s build!” the people say. Not so fast. Building costs have more than doubled since 2004. (That sounds like something you might read on a Monopoly Chance card, doesn’t it?) The truth is, the building that would have cost $1 million to build in 2004 will now cost more than $2 million. The congregation faces a decision: build half of what was proposed or continue to save money.

You could have built cheaper and gotten what was needed had you taken out a loan in 2004. A 15-year commercial loan in 2004 had an average rate of 4.75 percent. That means if you borrowed $1 million to build in 2004, you would have paid $1.4 million for the building after making your last payment. The church would have gotten a 12,500-square-foot building for $112 per square foot; it would have saved nearly $50 a square foot by taking out a loan in 2004 rather than waiting to build in 2019. That’s a total savings of $625,000.

The church I serve just purchased a building to house our second campus. We were presented with an amazing deal to buy a 50,000-square-foot building for millions below market price. We did not have the money set aside to pay the asking price, but leadership knew we’d never get a better deal were we to wait until we had all the money. We couldn’t build, rent, or lease cheaper than what we paid to purchase that building. We took out a loan to secure the building because, had we waited to save the money, the deal would have passed us by. Sometimes, but not always, securing assets now is cheaper than securing them later.

 

The Risks Are Low and the Rewards Are High 

Anytime you take on debt, be cautious and calculated. As far as I can determine, around 280,320 churches in the United States (73 percent) are carrying debt. A Reuters article reported that 270 churches were sold after defaulting on loans in 2010; it was the worst year on record for church foreclosures. The risk is low that a congregation will default on a loan; it’s only 0.09 percent, or less than 1/10th of a percent. Here’s another way of looking at it: 99.9 percent of churches fulfill their obligation to pay back their loan.

While the risk of a church defaulting on a loan is low, the rewards of taking out a loan to build are high. Most churches are not crippled by debt but by lack of vision. When godly vision is present, people and places flourish. If you build it, they probably will come. I recently talked to the CEO of a large church extension fund; he told me that, after completing a church building project, you can almost count on 40 percent growth in 6 months, and doubling in size in 18 months. That’s been true at the church I serve. He also said that total attendance of all the churches who had loans out with them in 2011 was around 65,000. Today, those same churches have a combined total attendance of more than 115,000. That works out to 80 percent attendance growth! By the way, those churches have baptized more than 17,500 people in the past eight years. Don’t forget, with church growth comes giving growth.

 

Your Church’s Loan Payment Has the Potential to Grow God’s Kingdom 

If your church ever needs to take out a loan, borrow from a church extension fund. Church extension funds think beyond themselves and have a deep concern for building God’s kingdom. The interest you pay on the loan from a church extension fund goes back to kingdom causes that further the gospel of Jesus Christ. You can’t say that about your local bank. You may find a lower interest rate at a local bank, but you’ll find that they don’t have an interest in ministry.

The church I pastor has found a true partner in ministry with a church extension fund. In addition to loaning us money to build buildings, they have invested heavily into our leadership and into me personally. A church extension fund desires to see your congregation grow. They will help a congregation become better stewards of money, develop a culture of generosity, and they may even provide grants once a year to lessen or even eliminate a monthly loan payment.

Matt Merold has served as the senior minister of Bethany Christian Church in Washington, Indiana, for 18 years.  A gifted speaker and Spirit-filled leader, Matt has been instrumental in leading a small-town church to experience amazing growth.


Matt Merold says says churches should not embrace and utilize debt. Be sure to read Chris Philbeck’s opposing viewpoint.

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