How To Plan Your Project

When you work with Pinnacle Lending Group, you benefit from the knowledge and experience we've acquired through our many years of church financing. We will successfully guide you through your project, whether it's a large-scale construction project or a refinance of existing debt.

How to Avoid Common Problems

Sometimes churches inadvertently put their projects at risk because they are unaware of some of the guidelines that should be followed. We'd like to point out some possible pitfalls to avoid with your church financing:

• Consult with a lender to determine your church's borrowing capacity before hiring an architect and spending money on plans. You wouldn't want to spend thousands of dollars on architectural plans only to learn that your project needs to be scaled down.
• Learn about any zoning, environmental, or entitlement issues that could affect your project. Don't finalize a purchase agreement or put dollars into escrow before you investigate these issues.
• Check your contractor's references. Has the contractor worked on church projects of similar size and type, and how did those projects go?
• Make sure you have all the funds necessary to complete your project before you begin construction. Don't depend on funds from a future event, such as the sale of your current facility, to provide the funds. Even if you have a signed Purchase Agreement for your current facility, wait until you have actually received the funds before you begin.

Tips on Choosing an Architect

• Choose an architect that has designed churches. An architect with experience working on churches has valuable knowledge that other architects may lack.
• Make sure your architect addresses lighting, sound, heating, cooling, and parking issues when designing your project.
• If an architect has not worked in your city previously, make sure they investigate local planning requirements. Different geographic areas have different requirements, so it is important your architect takes the time to become familiar with requirements that could affect your project.
• Make sure your architect investigates and resolves issues of traffic flow, turning lanes, utility hook-up, and any other issues with neighborhood impact. Access to the property (driveways) must meet local ordinances.
• Don't incur architectural costs until you've determined your borrowing capacity. This will prevent you from spending thousands of dollars on architectural plans that you may not be able to use.

Note:  We represent a great company called ChurchPlansForLess.com. We, as representatives, can offer church plans at 40% to 60% discounts.  When you go to the site and look at floor plans make sure you choose Dana Campbell as the consultant who referred you.  That allows me to make sure you get the discounts on the plans. 

Click here to view our architectual church plans!

Tips on Choosing a Contractor

• Choose a contractor experienced in building churches of similar type and size.
• Ask for references and check them closely. Find out if the project was completed on time and on budget.
• Ideally, find a contractor experienced with local building and environmental codes.
• Although Bank of the West rarely requires a Performance Bond for its church loans, ask your contractor if he is bondable, and for what dollar amount. It is preferable to use a contractor that can qualify for a performance bond.

A Well-Prepared Budget

Your project budget should include all hard and soft costs.

Hard costs are the construction-related costs. If you do not have actual bids from contractors, you can estimate your costs based on a typical cost per square foot. Architects, contractors and lenders know typical costs for various types of structures. Also, be sure to include funds for seating, furnishings, lighting, and audiovisual items.

Soft costs are often overlooked; they include permit fees, soil testing, inspection fees, state documentation taxes, engineering fees, etc.

Your budget should also include costs related to preparing your site. Site work may include grading, retaining walls, environmental remediation, retention ponds, or demolition of existing structures.

Architect's fees and other design expenses should be identified separately from other development expenses.

Many banks will require that a qualified cost engineer review your budget and specifications for the project, to ensure that your project can be constructed for the specified contract amount.

Most lenders will ask you to prepare a Sources and uses.pdf statement, detailing how you plan to fund the project, and how the funds will be spent. Tips for creating a statement are listed below. This type of budget will help you make an appropriate representation to your lender, and will help your church get a handle on the cost elements of your project.

Tips for filling out a Sources and Uses Statement:

• If you have recently acquired a site, the lender will want to know the actual cost of the site and the date it was purchased.
• The City or County may require you to lay new roads, install turning lanes or streetlights, or install utility lines. Be sure to research these items when you are putting your budget together.
• The "Cash Spent" amount should include all expenses incurred so far on items in the "Uses of Project Funds" categories. Be sure to include the date of this calculation.
• The lender will want to know your actual cash on hand as of the date of your application. Only include funds that are available for the project; do not list funds that are committed to other uses.
• You may include a reasonable projection of the additional cash you anticipate receiving prior to loan documentation. The lender's financing commitment letter may require that you have that cash before the loan is documented.
• If you plan to sell an existing facility to generate the required funds, the sale must be completed before the loan documents are executed. Otherwise, the funds should not be considered as a reliable "Source".
• To determine the amount of debt required to complete your project, start with the Total Uses figure and subtract all other Sources figures. That will be the amount your church seeks to borrow.
• The Total Sources figure and your Total Uses figure must be an identical amount.