Church Financing and SBA Loan
There are many differences between traditional commercial loans and church financing products. Some traditional commercial real estate properties, such as owner-occupied ones, or mostly-owner-occupied ones, qualify for SBA loans. There are many types of SBA loans, which are all essentially loans guaranteed by the Small Business Administration. This government body guarantees to pay back a portion of the loan in the event the borrower defaults. If the loan is not repaid and if the lender needs to foreclose on that property owner, then the SBA will make that lender whole for the losses which they sustained. US nonprofits including churches do not qualify for an SBA loan under normal circumstances. However, there are exceptional emergency situations, such as Hurricane Katrina for instance, where the SBA issues Disaster Relief Loans.
While these loans were available after the hurricane, evidence suggested the process was mishandled and several eligible applicants were rejected. However, SBA’s officials claimed several applicants did not accept the loans since they found alternative ways to rebuild.
SBA loans for churches come as a great relief in times of need. Businesses, homeowners, and nonprofits may apply to the administration for a loan. Loans are meant to cover the losses which are not entirely protected by insurance. Economic injury disaster loans are one of the kinds of SBA loans which exist.