Loans

Standard Loan Terms

• The term will typically be 20 years, although shorter and longer terms are available without impacting the interest rate.
• Unlike most commercial loans, there is no balloon payment – the amortization period aligns with the maturity date of the loan.
• The interest rate is annually adjustable and is based on Orchard Alliance’s internal cost of funds rather than a national index such as the “Prime Lending Rate.” This provides greater stability.
• Three- and five-year fixed rate options are available. After a fixed-rate period ends, the interest rate is then subject to annual adjustment.

For more information, complete the form below or call 833.672.4255.

Lower your Loan Payment

Orchard Alliance offers a unique opportunity for churches to encourage their supporters to give through planned future gifts while also helping reduce monthly loan payments!

For a more detailed explanation or to contact us regarding lowering your loan payment. CLICK HERE

To watch a video explaining how it works. CLICK HERE

Fixed Payment Loan

Fix your monthly payment for the first ten years of your loan based on the initial interest rate and a 20-year amortization. A fixed payment amount simplifies budgeting and cash flow planning.

Fixed Payment Loan details:

• Your interest rate may adjust, but your payment remains fixed at the original amount for at least the first ten years of the loan.*
• The maturity date of your loan will be based on a 30-year term, although the loan will likely pay off sooner.
• Beginning in year 11, your monthly payment will be either 1) a fully-amortized payment that will pay off the loan by the 30-year maturity date, or 2) the original fixed payment amount, whichever is greater.
• Your monthly loan payment will be adjusted each successive year in this manner until the loan is paid off. At no time will the loan payment be less than the original payment amount.
• In the case of a construction loan, you will make interest-only payments until the final loan draw is taken, at which time the fixed payment amount will be calculated based on the actual loan balance and the original interest rate documented in your loan approval letter. The 30-year maturity date for the loan will be based on the time of the final loan draw.

For more information, complete the form below or call 833.672.4255.

* If your fixed payment amount is not sufficient to cover the monthly interest accrual, your payment will adjust to this higher amount until the interest rate decreases, allowing for a lower interest-only payment or the original fixed payment amount once again.

Small Unsecured (SUN) Loan

Choose a SUN Loan when your church or ministry needs an unsecured and streamlined financing option for amounts up to $200,000. Read stories and see survey results of others who have received a SUN Loan here.

SUN Loan details:

• Loan funds must be used for real property-related purposes including external refinances, purchases, construction, FF&E, soft costs, etc.
• Terms are available from one year to ten years.
• Interest rates are annually adjustable and set by Orchard Alliance.
• SUN Loans have no prepayment penalty.
• You may only have one active SUN Loan at a time.
• Any existing secured loan may not be refinanced into a SUN Loan.
• All funds are to be disbursed in a lump sum after receipt of signed loan documents.

For more information, complete the form below or call us at 833.672.4255.

Line of Credit

Orchard Alliance provides lines of credit in two forms:

Companion Line of Credit

A “Companion Line of Credit” is provided in relation to a Standard Loan or Fixed Payment Loan (the “companion loan”).

Terms:

1. A Companion LOC will be limited to $200,000 or 10% of the original amount approved for the companion loan, whichever is less.
2. The LOC will bear the same interest rate as the companion loan plus 25 basis points (0.25%).
3. The LOC will carry the same maturity date as the companion loan.
4. The LOC may not carry a balance for more than 47 consecutive months and must maintain a $0 balance for at least 30 consecutive days to reset the 47-month countdown.
5. The borrower must make monthly payments of all accrued interest.
6. The LOC will terminate as soon as it has a $0 balance after repayment of the companion loan. Any outstanding LOC balance must be repaid before OA will satisfy the security document of the companion loan.
7. A borrower with an existing loan may apply for a companion LOC at any time. The size limitation of such an LOC will be based on the original amount approved for the companion loan.

Independent Line of Credit

An “Independent Line of Credit” is for churches and other ministries that do not have a regular Orchard Alliance loan, or that would prefer a line of credit that is not tied to another loan.

Terms:

1. Independent LOCs will be limited to $200,000 or 10% of the most recent year’s operating income, whichever is less.
2. The interest rate will be adjustable monthly and set at the OA Base Rate (the “index”) plus the standard margin plus a premium of 50 basis points (0.50%).
3. The term will be 10 years.
4. The LOC may not carry a balance for more than 47 consecutive months and must carry a $0 balance for at least 30 consecutive days to reset the 47-month countdown.
5. The borrower must make monthly payments of all accrued interest.

For more information, complete the form below or call 833.672.4255.

Estimated Loan Payment

Your church’s new loan will create a variety of ongoing expenses. Foremost among these expenses is the monthly loan payment.

Use the calculator below to calculate your estimated loan payment in advance, so you can count this cost and plan accordingly.

Please call 833.672.4255 or complete the form below to contact us about interest rates.

Planning for Other Expenses

Depending on the scope of your project, your church’s loan could also result in increased utility costs, increased maintenance and replacement expenses, and increased property/casualty insurance costs.

• Estimate utility cost increases by accounting for the increase in square footage as well as any increase in potential facility usage throughout the week.
• Contact your insurance company for a quote to estimate property/casualty insurance cost increases; they will need property information related to your project
• Estimate your ongoing maintenance and replacement expenses using this planning tool:

Fundraising/Capital Campaigns

As you count the cost, especially a monthly loan payment, it may be in your ministry’s interest to pursue fundraising. If so, Orchard Alliance recommends the services of Steve Johnson at Stewardship Journey Consulting. Steve specializes in church capital campaigns and has helped numerous Alliance ministries meet or exceed their fundraising goals. You can connect with Steve at (763) 294-1814 or steve.sjc@gmail.com. Be sure to tell him you are an Alliance ministry and were referred by Orchard Alliance.

Taxable Income

Does your church or ministry receive income from any source other than charitable contributions? If so, some or all of that income may be taxable. The IRS is concerned with how your income is generated, regardless of whether it is ultimately used for your tax-exempt ministry purpose.

If your ministry receives income from any source other than charitable contributions, use the Church Management Guidelines document from the C&MA’s Office of the Corporate Secretary to determine whether or not you may have an unrelated business income tax (UBIT) liability.

Important note: choose “enable macros” as you open the spreadsheet. The decision matrix linked to above is designed to provide accurate information for C&MA churches and districts in regard to the possibility of unrelated business income. This tool is provided to assist a church or district in making a preliminary finding and is not intended to encompass all applicable laws and regulations. Because the response to each question must accurately reflect the circumstances of a specific scenario, there is no guarantee that the results obtained will always be completely accurate. It should be understood that the provider of this decision matrix is not engaged in rendering legal, accounting, tax, or other professional services. Once a conclusion is drawn from the decision matrix, it is strongly recommended that the services of a competent professional be sought.

Important Information for Districts

As district leaders, your involvement in the loan approval process is essential. The District Executive Committee (DEXCOM) must endorse every new loan in your district. Before any new loan is sent to DEXCOM for consideration, you should discuss and verify the loan amount with the borrowing church and/or Orchard Alliance. You may contact us directly at any time to request a list of current loan applications from churches in your district. For some loan requests, especially those involving construction, a loan amount higher than the initially requested amount may be necessary.

Additionally, an assessment and formal recommendation from the borrower’s district superintendent is required as part of the application process. Districts can access and download these forms here:

• District Endorsement and Commitment
• District Superintendent Assessment and Recommendation

District Line of Credit

Each geographic and ethnic district of The Alliance can obtain an unsecured line of credit (LOC) up to $200,000. This is Orchard Alliance’s Independent LOC product but without the borrowing restriction related to operating income.

Self-Funding Rate Discount

Self-funding is a unique way to lower the rate on your church’s loan by encouraging church members who invest in Orchard Alliance to associate their investments with your church. It costs nothing and does not affect the return on your investment, but it can dramatically affect the interest rate on your church’s loan. Getting started is easy:

1. Invest in an Orchard Alliance investment certificate (with a term of one year or longer) or an IRA.
2. Name your church on the investment application.
3. Enjoy the double benefit of earning interest on your investment while helping your church pay less interest on its loan.

You earn interest on your investment, just as you would at a bank. Meanwhile, Orchard Alliance calculates the weighted average rate of all investments being used to help the loan, and the interest rate of your church’s loan will be this weighted average rate plus 2.00 percent.*

This is self-funding.

Your investment is in no way “locked up” at Orchard Alliance because of self-funding. If you need to redeem your funds for any reason, they are available to you. (Standard early withdrawal penalties may apply. See the current offering circular for details.)

For an example of self-funding at work.

For a more detailed explanation of the self-funded rate calculation.

To learn more about Orchard Alliance investments.

*If the total dollars invested in self-funding is less than the balance on your church’s loan, Orchard Alliance will simply blend the self-funded rate with the standard loan rate proportionally based on the total balance of the investments and the outstanding balance of the loan.