Church Financing Tips: Better Budgeting

Church Financing Tips: Better Budgeting

BudgetA well-built budget is key to thriving financially, whether it involves one’s church, business, or personal life. And when it comes church building and getting the project paid for, a realistic and well-thought-through budget will make the loan application process much easier as well.

Refining Your Church Design’s Big Picture

Naturally, any lender is going to want information on exactly what you’re planning to do with your new church building or renovation project. You can’t just tell them, “We’re going to build a new building that includes a worship space, offices, and five classrooms.” You must communicate what you’ll be doing and how that will be reflected in your new building, from the ministries happening in each of those spaces to bathroom capacities and the circulation around the building.

Better Drawings = Better Budgeting

This is why we always recommend completing schematic design studies before you submit your application to a lending institution. The more the design reflects the ministry you will be doing the better you can estimate the cost to complete the project.

If you were to construct a budget without this information, industry experts say your budgeting could be off by as much as 30 percent on the low side or up to 50 percent on the high end. Lending institutions are not going to want to work with numbers as uncertain as that.

Of course, drawings add some upfront expense—but the fact is you’re going to need that information anyway. Here at The McKnight Group, we take the time to examine churches ministry needs so that we can complete schematic design studies that will include specific budget information.

Our work provides enough detail that our budgets are consistently accurate, with a variation of 5% under or over the budget. Banks are happy to work with budgets in that range and trust the numbers.

So What’s in Those Budget Numbers?

The schematic drawings we create don’t just include information on the cost of the building itself. As we’ve discussed in a prior article, there are four areas that need to be considered for your church financing budget: direct building costs, site prep costs, fees, and FF&E.

FF&E stands for furnishings, fixtures, and equipment, and it’s the most overlooked area when church leaders don’t involve construction professionals in their budgeting and church financing process.

Think for a moment about the requirements for creating a welcoming restroom. You don’t just need to estimate building costs like toilets and good-looking stalls to separate the toilets. You need lights and sinks and mirrors.  You will also need furnishings and equipment like soap and paper towel dispensers, and wastebaskets for those paper towels. If you’re going to have a powder room, you need comfortable chairs and couches with end tables; you need fashionable lighting, mirrors, and flooring; you need more wastebaskets, and maybe some stylish silk flowers—that’s a lot to consider for outfitting just one restroom.

Then, when you begin to think about your worship space, it gets a lot more complex. Yes, there’s the seating and the flooring and the stages and a production booth.

But there’s also all the different types of lighting, sound systems, and wiring, as well as projectors and screens, seating on the stage, musical instruments, and their connections into the sound system … the list goes on. Repeat that process for every room in your new or renovated church building, and you get a sense of why the budgeting process involved with church financing is complicated.

Involving Church Building Experts in Your Church Financing Process

This is why we believe church design studies are critical to the success of any church financing process. We’ve been in the business of building churches for more than 45 years, so we know about the FF&E details, as well as everything else you need to build a comprehensive budget estimate for your church building project. To learn more, visit our website and sign up for our free i3 webinar series, or contact us today with your specific budgeting questions.

2016-08-10T11:23:18+00:00 August 10th, 2016|Budgeting, Church Building, Financing, Uncategorized|