Satellite expansion from the lender'azines view


Satellite locations and church growth  

In recent years, your launching of congregational outposts – also referred to as satellite locations – in to a popular strategy for relieving the pressure of growing attendance on a “main web page,” or for stretching a borders of the religious institution’s tent by expanding into a flourishing suburban community.

Historically, religious establishments tended to try to grow at a single location by putting into action a multi-phase masterplan whereby early expansion was housed in one or over structures in a single location that may later be converted to classes or offices after congregational improvement leveled off and better identified the needed size of the final design: the worship center.

Lenders have risen comfortable, however, with the multi-location strategy, due, in part, to its scalability. Coming from a risk manager’s perspective, in case the religious institutions were to face financial challenges due to both an economic downturn or a command transition, having one massive mortgage payment presents fewer opportunities than two smaller people. A decline in input could be offset by the closure of a satellite location.

Nevertheless, despite the fact that lenders are generally comfortable with this satellite trend, there are several dos-and-don’ts which often your religious institutions leaders team should be aware of in order to secure the long-term support of a personal partner. 

Leasing a facility

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When adding a new worship location, the most common and fiscally prudent approach is to begin with leasing a facility. Originating in a relatively smaller space allows the parent organization to restriction its start-up costs and possible impact to consolidated profit. The lease duration also need to be short enough to accommodate the subsequent relocation if expansion should warrant, yet good enough to justify the dollar cost of tenant improvements required for ministry employ.

There are no set rules in connection with this; however, lenders are probably not going to be receptive to a prefer to make a multimillion-dollar investment in tenant enhancements to a facility with a short-term (12C to help 24-month) lease. Depending upon the age and stability of the satellite congregation, the inclusion of an option  to acquire might mitigate this concern. 

Tracking attendance

Once any satellite matures to a think of steady worship work and contributions, the lender will almost certainly entertain a request to buy or build a facility for the satellite congregation. Conversely, to expect that your lender will be often unwilling to make a $5 million loan to shop for or build a facility for the startup satellite at a spot where you have no track record of work. 

Operating multiple leased satellite spots in various stages of maturation is not uncommon; however, the ratio of attendance at leased places versus owned sites may cause your lender concern. If the religious institution has an individual mortgaged location and five got locations, and only 50 percent of one’s total institution’s revenue is being made at the lender’s collateral web site, the lender might feel that  (depending upon the duration of the rentals) the religious institution’s consolidated earnings is excessively vulnerable  to conveniences which it does not control.

Also, inside of a worst-case default and potential property foreclosure scenario, the lender might contemplate how hard the faith based institution will work to hold on to ownership of the mortgaged facility. Should a majority of contributions are obtained at leased facilities, the financial institution might fear the lender could easily walk away from your mortgaged property. In my experience, lenders are often more likely to support your satellite television expansion plan if they know 70 percent or more of your additions are being collected at owned or operated facilities which are part of the company’s collateral pool.   

Merging with smaller ministries

Another recent trend is dish expansion by way of merger. Considering that the economic downturn, many larger financially stable congregations have been approached by way of smaller faltering ministries in need of shelter. This can present a win-win chance.

The merger is often effected by rolling the assets of just one entity into the other after which dissolving the smaller corporate entity. In various other instances, two corporate entities continue under a common identify and pulpit leadership.

In either case, if your ministry which you are taking  under your side has debt, be sure to examine your plan with your mortgage lender prior to moving forward with the merging. Your attorney might tell you just how retaining separate corporate businesses will shield the parent organization from the liabilities of the smaller sized ministry. While this might be legally suitable, your lender might have other difficulties.

Regardless of the corporate distinctions, the mortgage lender realizes that the surrounding communities could view the two organizations together with a single spiritual director. Consequently, if the smaller congregation struggles with its debt, the parent entity might be compelled to envision the burden of financial subsidy in order to avoid status risk.

In a worst-case scenario, if ever the satellite church defaults and another lender forecloses on the building, the area media will likely associate your good name with the foreclosed. Should this occur, your loan company will be  concerned about your congregation’s understanding of the event and a potential refuse in your congregation’s confidence in your leaders, along with their financial contributions. Inspite of your best efforts to explain any technical separation between the two legitimate entities, some  percentage of your contributors might not understand the nuances and may also be  reluctant to “throw good money after lousy.” 

Satellite ministry expansion is clearly the trend which is gathering momentum. Experienced lenders with a track record of funding religious institutions could sit down with your leadership workforce and define the  dos-and-don’ts of satellite tv for pc expansion. Broaching this topic quick with your lender can only be beneficial to your religious institution plus help ensure a rewarding connection with your financial partner.

Dan Mikes is definitely Executive Vice President and National Manager of the Religious College Division, Bank of the Gulf, San Ramon, CA.

The views and ideas expressed in this article are those in the author and do not necessarily mirror the official policy or placement of Bank of the Western side.


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