Brokers can charge high points.

False. In many cases, if the church is desperate for financing, the board of directors or elders will agree to anything. And some brokers will see this as an opportunity to charge an outrageous amount of points. The lender, however, will generally view this a little differently. Some lenders will only allow 0.25 points, whereas others will allow as many as 2 points. There is no standard, generally speaking, but 2 points is about the most a broker should expect.

Churches are businesses like any other.

True and false. Yes, they do have an income, a budget, debt and all the other financial details expected from a business, but they simply do not show profit. A church's structure is different insomuch as it often doesn't file taxes. But for accounting purposes, it must still document every dollar that it earns. Often, lenders will need to see audited financials and bank statements as opposed to tax returns in faith-based lending.

Nothing can be done if a church is in foreclosure.

True and false. This depends on the property type and how aggressive the church wants to be. If the building has more commercial characteristics than faith-based ones (such as religiously themed décor) and could easily be remodeled to suit a business, hard-money lenders may be interested.

Also, many churches have day-care centers and after-school programs. These are legitimate sources of income that might be able to help a church out of foreclosure.

There are hundreds of places of worship in every major city in North America, and there can be dozens of them in small towns. Churches are constantly projecting growth -- from adding day-care centers to increasing summer programs to expanding after-school youth activities. As a result, they are always on the lookout for new facilities to move into or ways to improve their existing facilities. Each plan requires a new mortgage.

Although lending to faith-based organizations may not be easy, the referral business from funding a successful mortgage application can be lucrative.

Christopher Farrell and Chris Sanders are co-owners of Sanctuary Lending, a full-service brokerage firm that specializes in institutional lending for churches, schools and other facilities throughout the country. In addition to cash-flow funding, valuation funding and equity funding, Sanctuary Lending also acts as a conduit for nonprofit entities for state programs and accounting. Farrell's and Sanders's complete contact information can be found at SanctuaryLending.com.

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