He had learned in a telephone call from Steve Dawson, president of National Covenant Properties (NCP), that the interest rate on the loan to Celebration Covenant Church in Omaha, Nebraska, was being reduced half a point from 7.25 to 6.75 percent. “It’s a very nice phone call to get,” Ferguson quipped.
Dawson was spreading the good news to pastors around the country. He was able to make the calls because the NCP Board of Directors voted last Thursday to reduce the rate for all churches with loans that had either initiated or adjusted at the peak of rates over the last four years. The NCP board further assisted those churches by allowing the congregations to reduce their payments along with paying less interest.
The board’s decision will affect 69 churches, Dawson says.
“All of our loans adjust every three years,” Dawson explained. “Sometimes the market rates are such that a church adjusts right at the peak. When rates fall, they are stuck for a season at this higher rate,” Dawson adds. “We’d love to do it for all loans, but the reduction would have been negligible (to keep it within NCP’s budget) and the rest already are close to current market rates. The loans we adjusted were the loans at the upper tier.”
Dawson adds that “the drop in interest payments will mean a manageable reduction in revenue to NCP, but the board made the move because we sensed it was the right thing to do. This is a step it has taken three or four times in the past.”
Celebration, which was planted in 2000, moved into its first permanent building last fall. The loan payments were forcing new, difficult decisions, however. The church was caught in the dilemma of needing staff in order to grow, but being too cash-strapped to keep the staff.
“We were facing possible staff cuts,” Ferguson says. “(Reducing the rate) is going to make it much more likely that we will continue to grow.”
Rick Milliken, executive pastor at Eastridge Covenant Church in Clackamas, Oregon, was another pastor excited by the news. Due to cost overruns at the site of the congregation’s recently constructed building, the church’s budget had tightened considerably.
“This will really offset the overages and bring back the payments to a manageable level,” Milliken says. As a result, the congregation will have the freedom to expand ministry that might have had to be cut.
The pastors expressed gratitude for NCP’s decision. “We had no idea we were going to get a drop in the interest rate,” Milliken says. “It’s kind of wild that a lender would lower your rate without you asking them. No bank is going to do that.”
Ferguson says NCP’s support goes far beyond what he received from the denomination he previously served. His congregation then had been forced to issue bonds in order to build.
He says the assistance provided by NCP has extended far beyond the loan. “NCP helped us pick a location – a tremendous location at the end of a busy street.” The denomination also assisted the church in deciding what would be needed in the new building. The Evangelical Covenant Church and Midwest Conference also provided funding for the startup of the church plant.
In 2007, NCP made loans to more than 50 church projects with loan advances totaling $35 million, Dawson says.
