Loan FAQ
Q: What is difference between the Assistance Program and Loan Program?
A:Assistance Program: provides capital grants to mission congregations that meet established requirements. The grants are funded by gifts, memorials and bequests made by WELS members to directly to WELS CEF. Loan Program: Operates as a revolving fund for all loans made by WELS CEF to WELS congregations. As the loans are repaid, the funds are reinvested into new loans to help start other mission congregations.
Q: How much money has been distributed from the Assistance Program to WELS mission congregations since its inception?
A: The Assistance Program was established in 1993. As of December 31, 2007, the Assistance Program has provided just over $20.7 million in the form of matching grants to mission congregations.
Q: How does WELS CEF "prioritize" loan requests?
A: Loan requests are prioritized in order as follows:
- Home Missions
- World Missions
- Other WELS Capital Funding Projects
Q:Does my congregation qualify for the loan and/or grant programs offered through WELS CEF?
A:WELS CEF's capital funding policies for the loan and grant programs are summarized for you in the file entitled "Eligibility summary for loan and grant programs." This file is posted in the church loan section of this website.
Q:Can a self-supporting WELS congregation apply for a loan through WELS CEF?
A: No. At this time WELS CEF is not providing new loans to self-supporting congregations. However, if a self-supporting congregaton is working under the guidance of their District Mission Board on a "mother-daughter" partnership or multi-site ministry they may be eligible for financing. Please contact your District Mission Board representative or WELS CEF if you have questions regarding this type of special project.
Q: What are the current church loan terms for qualifying mission congregations?
A: Loans to qualifying mission churches are written at base rate. Under current policy, all CEF loans are written for 5 years. A 25-year amortization schedule is used to merely estimate payments for years 6-25. All loans balloon in five years. Mission congregations receive the base rate for 10 years. In years 11-15, interest rates increase to base rate + 1%. In years 16-20, interest rates increase to base rate +2% and so on.
Q: What is the current interest rate for a loan to a mission congregations?
A: Mission congregations who meet certain requirements qualify for a mortgage loan through WELS CEF at the base rate. Currently, the base rate is in effect for two consecutive 5 year terms (or ten years). As of July, 2007, the base rate has been set at 4.5%. The base rate is reviewed by the Board of Directors and is subject to change.
Q: How often does the Loan Committee meet to review loan requests?
A: The Loan Committee meets monthly to review loan requests from congregations located across the United States and Canada. Loan requests must be received by the 10th of the month. The meetings are usually held during the third week of the month. Packets must be received by the 10th of the month to allow the CEF loan staff to review the details of the request and distribute packets for the CEF Loan Committee members to review prior to the meeting. Packets received after the 10th are handled in the following month's meeting.
p Q: Who makes up the Loan Committee?
A: The CEF Loan Committee is currently made up of 6 administrators from the WELS, WELS CEF and the Board for Home Missions (BHM). Currently, the WELS CEF Treasurer serves on the Loan Committee. The BHM Administrator and the BHM Associate Administrator also serve in this capacity. Members of the WELS CEF who serve on the committee include the President, Vice President - Loan Servicing Manager, and the Vice president - Loan Origination Manager.
Q: What documentation does the WELS CEF Loan Committee require from a mission congregation when making a loan request for a land purchase?
A: Loan requests made by a mission congregation to purchase land must include:
- A cover letter briefly describing the land searc
- A completed CEF loan application
- A copy of the signed offer to purchase
- A legal description of the property
- A zoning compliance letter showing that the property "...can be used for a church, a school, or other ancillary uses."
- A letter of approval from the District Mission Board.
Q: What documentation does the WELS CEF Loan Committee require from a mission congregation making a loan request for a facility construction project?
A: Facility construction loan requests from mission congregations must include:
- A cover letter that briefly describes the facility construction project
- A completed CEF loan application
- A copy of detailed project cost estimates from the architect or design builder.
- A copy of the last three annual financial reports from the congregation
- A building fund update, including any pledges collected and outstanding
- An itemized list of costs paid locally
- A letter of approval from the District Mission Board
Q: What documentation does the WELS CEF Loan Committee require from a congregation making a request to refinance an existing loan?
A: Refinance requests must include:
- A cover letter that briefly describes the need to refinance
- A completed CEF loan application
- A letter of approval from the District Mission Board
Q: Does WELS CEF charge a loan origination fee?
A: No. As of March 1, 2008 we changed our policy from a 1% origination fee to a $500 non-refundable applicaton fee to be sent with each new loan request. In addition, construction loans are charged a rate 1% higher than amortized loans.
Q: What is the turn-around time for the processing of construction draws?
A: The typical turnaround time is 2 business days.
Q: During construction, what is the procedure for requesting draws from the WELS CEF loan office?
A: Invoices, along with an actual request for payment, must be mailed into the WELS CEF office. The request for funds must be signed by an authorized member of the congregation. The congregation must collect lien waivers for each draw request. With each new draw request, lien waivers should be included for funds requested in the previous draw. To expedite payment of invoices, the congregation may FAX requests to the office at (414) 256-6480. The original invoices will still need to be sent in via regular mail with a note stating that they have been paid from the FAX copy.
Q: What is a lien waiver?
A: A lien waiver is a document/form completed by the contractor. This document/form acknowledges that payment has been received on work completed.
Q: How is interest calculated during the construction period?
A: Down payment monies and grant monies are spent first. Once these monies have been depleted, a loan balance begins to grow during the construction period. Monthly interest is calculated on the construction loan balance. Interest payments begin on the first day of the month, following the first disbursement of loan dollars. Monthly billing occurs thereafter as the construction loan balance grows.
Q: Does WELS CEF offer short-term (1 year) construction loans?
A: Yes. Since Thrivent does not currently offer construction financing through their church loan program, WELS CEF has occasionally been asked to provide short-term construction financing when self-supporting WELS congregations do an expansion project. A request for such a short-term loan from WELS CEF would need to include a take-out commitment letter from the lender providing the long-term financing involved.
Q: Is it necessary to incur the added expense of a title search, etc. when loans are renewed?
A: In the rare event that the renewal balance exceeds the amount of the existing title policy or mortgage, an updated title and new mortgage with applicable closing costs would be required. However, if the renewal balance is below the existing policy and mortgage amounts, updating the title policy would not be necessary. Therefore, no closing costs or title costs would be incurred. WELS CEF would simply require the signing of a new note.