Planting the seeds of God’s Kingdom can become surprisingly complex. Whether you’re looking for real estate to build a new facility or expand your current space, or considering a loan for church improvements, NCP helps you navigate the process with passion, integrity and wisdom. We’ve been serving Evangelical Covenant Church member churches since 1970, and currently provide more than $285 million in loans to more than 300 Covenant projects. Funds for these loans are obtained from NCP’s sale of investments to members and friends of Covenant churches. When you sense God calling your ministry toward program or facility growth, you need a ready partner. We’re here for you, so that, together, we help grow God’s Kingdom. Loans may be secured on the terms* below.
Types of Loans
NCP offers two types of loans:
- Short-term loans, which are typically used to fund the purchase of land
- Long-term loans, which are to fund construction and provide permanent financing for a
Variable Interest Rate
For long-term loans the interest rate is set by the NCP board. The interest rate for your loan will be the interest rate that the NCP board approves at the meeting in which your loan is approved. Both types of NCP loans have variable interest rates. The interest on short-term loans is tied to the Prime Lending Rate as reported in the Wall Street Journal and is adjusted daily. There is also an interest rate “floor” of 4%.
Your interest rate will be generally in effect for the period of construction (if applicable) and 36 months from the end of construction period. At the end of the 36 months your loan will adjust to whatever the interest rate is in effect at that time. It will then adjust every 36 months thereafter until the loan is paid off or reaches maturity. Whenever there is an interest rate adjustment on either type of loan, your payment will change.
NCP long-term loans are amortized over 20 years. Short-term loans are interest only and have a term of of not more than 20 years, but can be called by NCP at any time.
It is NCP’s policy to take a security interest (i.e., a first mortgage or deed of trust and a security interest on furniture and fixtures) on all property that the church owns at the time the loan is made.
- For long-term loans, NCP charges a loan fee of 0.75% of the approved loan amount. This
loan fee covers all of NCP’s expenses to close this loan with the exception of mortgage
tax if that is applicable to your state.
- For short-term loans NCP does not charge a loan fee but NCP’s expenses to close and
record the loan are paid by the church.
NCP does not require personal guarantees from members of the church, however for certain loan requests NCP does require that the loan be guaranteed by the denomination and conference. Typically, loan requests from church plants and adoptions purchasing their first piece of property require denomination and conference guarantees.
All NCP long-term loans must have a payment reserve equal to 3 monthly mortgage payments. This payment reserve can be funded from the loan itself and must be invested in a Demand Investment Account at NCP.
NCP has funds to loan to churches because individual Covenanters and Covenant churches and institutions invest with NCP. In order to ensure that NCP continues to have funds available to loan to churches, we require that churches that are approved for a long-term loan generate investments from their members and attendees in an amount equal to 15% of the approved loan amount.
Your loan documents will prohibit the church borrowing any additional funds without the express written consent of NCP. Carrying balances on a church credit card or checking overdraft line of credit are considered additional borrowing along with long-term leases of equipment, such as copiers.
NCP long-term loans have a prepayment of 1% of the principal balance at the time of prepayment if the church uses borrowed funds to pay off the loan. This prepayment penalty does not apply if the church prepays the loan using their own funds or funds donated for repayment.
You are required to maintain adequate property insurance on the church’s property and to provide NCP with a Certificate of Insurance showing that NCP has been listed as mortgagee on your property insurance.