Financing for the Student Center Project

     The start of the Student Center Project is near!  One of the important steps in order to begin by our target date of April 1st is financing the project, in other words, cash-on-hand.  With this purpose in mind Calvary's stewardship committee will present a recommendation to our Church in Conference on Sunday, March 3 at 6:30 PM in the gym.  We are asking you to pray and participate.

     It should be noted that in order for this recommendation to be approved we need to have a quorum of approximately 143 voting age members (10% of voting age members; voting age is 16) present and at least a two-thirds affirmative vote from those present and voting.  So it is important that you be informed, be present, and vote according to what you feel God leading us to do.

     The recommendation will consist of a resolution to secure a loan from the Baptist Church Loan Corporation in Dallas.  This post is to explain how this recommendation fits into the overall plan for the Student Center Project.  You can view and download a PDF of the proposed resolution by clicking here.  Below is the explanation by way of the following seven questions.

1. Why would we get a loan for the Student Center Project?
2. How much would we borrow and when?
3. How would we pay back this loan?
4. Who is the BCLC and why would we borrow from them?
5. What is the process for making this decision?
6. What is my role in this?
7. What are the terms of the proposed loan?

1.  Why would we get a loan for the Student Center Project?

     The reason for getting a loan has to do with timing.  Since our students have been without a student ministry building for six years now, we would like to get this project done now so that they can start the fall in a renovated facility.

     Our Student Center Project capital campaign has consisted of designated contributions and pledges.  Some of the pledges are one-year pledges, which mature at the end of this year.  Others are two-year pledges, which mature at the end of 2020.  If we wait until all the pledged money comes in, we would not be able to start the project this spring.  We would have to wait at least one year, maybe two!

     Although we have received a significant amount of cash already ($249,472) that can help us start soon, we need the remainder of the estimated $600,000 by the end of the summer.  Getting a loan of $300,000 (maximum) would help us ensure that we finish the project so our students can occupy their space at the beginning of the fall 2019.  Then, as the pledged contributions continue to come in, we can pay off the loan.

2.  How much would we borrow and when?

     Since the reason for the loan is to allow us to get the project done within the target time frame (April 1st through August 31st), we would borrow the difference between the cash on hand and the cost of the project up to a maximum of $300,000.  In other words, although the maximum loan amount is $300,000, we would only borrow what is actually needed according to the cash that is available from contributions.  The more cash that comes in during the construction phase, the less we will need to borrow.

     Initially the loan will be established as a construction loan.  It is essentially a line of credit.  When the project begins we will apply all of the cash available from contributions first.  As the project continues and more contributions come in, those contributions will be applied to the project directly.  Once we have applied all of the available cash on hand, we would make draws from the line of credit as needed.

     During the first two years of the loan we would only be obligated to pay the interest on what we draw.  For example, if we do not make any draws in April, we would have no balance due and no interest to pay.  If we make a draw in May of, say,  $75,000 then that would be our balance and we would only pay interest on the $75,000 and not on the entire $300,000 line of credit, and so on and so forth.

     If our contributions continue to come in strong or they grow in strength, we may not need to borrow the entire $300,000.  At the end of the construction period the loan is converted to a regular loan that includes principal and interest.  As pledged and non-pledged contributions come in we would apply them to the loan.

3.  How would we pay back this loan?

     The intent is to pay this loan with the student center project contributions.  Our goal is to raise $600,000 in pledges and contributions.  Read more about the campaign, design and leadership in my previous blog "We Love Our Students."

     As of this week we have raised approximately $439,000 in pledges and contributions.  We have already received $249,471 in actual contributions.  That's money that is either in the bank or that has already been applied to the project.

     As contributions continue to come in, we will apply them to the construction first and then to the loan.  It must be noted that almost one half of the contributions that come in each week are not from pledges.  In other words, there are people who are giving regularly to the project who did not make a pledge.  That means that at the end of the campaign, after all the pledges are fulfilled, we will surpass the $439,000.

     Furthermore if we can have an additional $160,000 in new pledges we would reach our campaign goal and we will have no problem paying the loan from those additional pledged contributions.  There are currently 251 family units participating in the Student Center Project.  If a minimum of 150 other families would participate we could meet and might even surpass the $600,000 goal.

4.  Who is the BCLC and why would we borrow from them?

     The Baptist Church Loan Corporation is a non-profit organization related to Texas Baptists, with whom we are affiliated.  They exist to help churches accomplish their construction, remodeling or acquisition goals.  So they understand how churches operate.  They understand pledge drives.  And they have a passion for helping churches succeed.

     Since the BCLC is a non-profit corporation and since their purpose is to help churches, they are able to offer very low interest rates, often below prime.  In our case they have offered us a fix rate of 3.99% which is about 1.25% less than the prime.  That is really exceptional!

     Gerald James, the President and CEO, is a friend of Calvary and we enjoy a long-term relationship.  Calvary utilized the BCLC in the financing of the Children's Building, and it was a positive experience for both parties.

     The stewardship committee consulted with various local banks, which were willing to work with us and offer us competitive interest rates.  However, none of them is able to offer us a rate below prime.

     You can learn more about the BCLC by going to their website.

5. What is the process for making this decision?

     The recommendation is coming from the stewardship committee.  The stewardship committee has been elected by the church to oversee the financial aspects of the church and to make recommendations regarding the stewardship of resources.

     On Sunday, March 3, 2019 at 6:30 PM the Church in Conference will have an opportunity to discuss and vote on the stewardship committee's recommendation.  Our Constitution and Bylaws require that when the congregation votes on borrowing money, there would be a quorum of 10% of voting age members.  Voting age, according to our church bylaws, is 16.

     As of this week Calvary counts on 1,424 voting age members.  There may be members who join or are dropped from the role during the week.  Nevertheless if we have a minimum of 143 voting age members (age 16 or older) we will meet the quorum requirement to be able to vote.  If we do not have 10% of the voting age members present, the congregation cannot vote on the proposal.

     Additionally, in order to approve the loan the vote needs to be two-thirds (2/3) in the affirmative of those present and voting.  Should the loan be approved, the trustees of the church would be authorized to sign the closing documents and the financing would be secured.

6.  What is my role in this?

     The Student Center Project depends on God's blessing and direction.  It is a church-wide project and every one makes a difference.

     We ask each person to pray for God's direction and God's blessing on the project.  We ask you to pray for the leaders and the various people who participate in decision making.  Read more about the project's communication flow by clicking here.

    We ask you to pray about the needed funds and your participation in financial contributions to the project above and beyond your regular giving to the church budget (tithe).  If you are already giving to the Student Center Project, we are thankful for you and we ask that you continue to give.  We're counting on you!

     If you have not participated financially in this project we urge you to prayerfully consider making a pledge or a contribution.  If we all do our part, we can exceed the goal!  You can visit our Student Center Project page to pledge and give online.

     Furthermore, we ask you to pray about the decision to secure this loan.  Get informed.  Pray.  Be present for Church in Conference.  Pray. Ask questions.  Pray.  Vote.  And keep on praying!  (On March 6 we will start 40 days of prayer and this project will be one of our primary prayer items).

     Above all, pray for our students.  Pray that they will continue to grow as disciple-makers and that God would bless and prosper Calvary's student ministry.

7.  What are the terms of the proposed loan?

     A summary of the terms of the proposed loan is included in the resolution which the church will consider at its Church in Conference on Sunday, March 3, 2019 at 6:30 PM.  You can download it here or you can view it below.  Additionally, you can download the Book of Reports here.