Purpose

To assist congregations in friendly cooperation with the Baptist General Association of Virginia and district associations needing help in erecting, preparing, improving or otherwise acquiring and maintaining suitable sites and buildings to be used exclusively for benevolent, educational and religious purposes.

To lend any part or all of its funds to different congregations or associations, and to receive in evidence of such loan any notes, bonds, or other obligations of debt, payment of which may be secured in such manner as the Corporation may determine.

Qualifying

It is our desire to assist BGAV member congregations and associations in site preparation, construction, acquisition, or renovation of church facilities. Our intent is to use our resources primarily to assist those congregations who are unable to obtain financing at reasonable market rates and terms.

All churches that apply for loans shall be active supporters of the Baptist General Association of Virginia, willing to commit to the continuing support and furtherance of the BGAV's mission and work. Loans made to churches that later withdraw from the BGAV are immediately due in full at the time of withdrawal.

First and second mortgage loans may be made and secured and documented in such a manner as the Extension Board may deem necessary.

The Extension Board would like to be able to assist all member churches of the BGAV as they build or expand. However, due to limited resources, the Board is often unable to be a primary lending institution. Our mission is to assist those churches that are unable to otherwise obtain the financing they require through traditional commercial sources with an appropriate interest rate and terms. The Extension Board may choose to help churches with a second mortgage in order to encourage commercial lenders to make the primary first mortgage loan.

Application Process

Churches or associations must complete a loan application provided by the Baptist Extension Board, and this application must be signed by the trustees who have been authorized by the church or association in business meeting. Accompanying the loan application should be information to assist Baptist Extension Board members in determining how to make a good decision in their stewardship of Extension Board funds. Examples of this information would be financial reports for the previous year and current year-to-date, membership totals, additions in the past two years, and a general description of the project intended. A letter from the local association's Director of Missions stating his/her views about making the loan also could be helpful.

The Baptist Extension Board meets regularly in February and July. The deadline for February loan applications is January 8 and the deadline for July loan applications is June 30. The Extension Board is open to receive applications at any time, and called meetings of the Executive Committee may be held when loan requests cannot be deferred until one of the regular meetings.

Between the time a loan application is submitted and an Extension Board meeting is held, several activities should take place:

1. One or more members of the Extension Board will normally initiate a personal consultation.
2. Churches applying for loans on church buildings should submit their plans to the church building and site consultant of the Virginia Baptist Mission Board for recommendations.

To provide support for a loan when the Extension Board meets, several church officers or associational leaders should be present. Leaders who have a knowledge of church buildings and properties, the construction industry, or finance are very helpful.

Once a loan has been committed by the Extension Board, that loan commitment expires after twelve months, if not processed.

Interest Rate

The interest rate for loans is set each February and July and remains in effect until the next regularly scheduled meeting. Normally the loan rate is established by averaging the 30-year home mortgage rate for the Northeast during January and June and then subtracting one-half percent rounding up to the nearest one-quarter percent. It is the intention of the Extension Board to offer loans below the market rate.

Terms

The maximum amount that will be lent to a church or association for a specific project is $500,000.00 (five hundred thousand dollars).

The normal maximum term for a loan for an established church is thirteen (13) years. The normal maximum term for a loan for a new church on a new site (less than 10 years old) is eighteen (18) years, including any "interest only" years. A new church may be granted up to three (3) years of "interest only" payments.

The Extension Board may also assist churches and associations in the advance purchase of land for new ministries. An association may be granted the right to pay interest only for up to seven (7) years on the purchase of land for new work.

Loan payments will be made on a monthly basis following disbursement of the loan. There is no penalty for early payments; in fact, early payment is encouraged so that funds can be made available to other churches needing assistance. If disbursement is made mid-month, the interest will be prorated for the portion of the month that the borrower has the money.

Any deed of trust loan for which the land value alone is insufficient to secure the loan in full, the borrower must provide evidence of an acceptable hazard insurance policy with the Baptist Extension Board, Inc., listed as a loss payee. The Extension Board will require satisfactory evidence of good and marketable title, which usually will require the church or association to furnish an acceptable mortgage policy of title insurance.

Documents

Notes, Deeds of Trust, and other documents required by the Extension Board shall be on forms prepared by or approved by the Extension Board. Between meetings of the Board, the Treasurer and Board's Attorney are authorized to approve the form of documents.

Delinquencies

Any loan three (3) months or more in arrears will be considered delinquent. Telephone contact will be made by the Extension Board after three months to determine the reason for delinquency and to inquire about how the situation might be resolved. If a delinquency continues for twelve (12) months, representatives from the Extension Board will visit the church to continue seeking a solution to the delinquency.

Churches or associations that face continued stress in making loan payments can apply for a temporary reduction in the original interest rate to a current, lower interest rate. All interest in arrears at the time of reduction continues to be payable and terms may be arranged for the repayment of back interest (including at the conclusion of the loan). Such reductions in interest rate are subject to periodic review by the Extension Board.