There has been recent talk on the UU-Money email list about accepting loans from congregants. The following information might be helpful.

The staff and consultants of the UUA Congregational Stewardship Services program are not supportive of seeking loans from congregants, especially when those loans are used to help balance an operating budget.

There is, however, one situation in which congregant loans might be a reasonable option. If a capital campaign has been completed and there are still insufficient funds available to complete a renovation or to grab that perfect building or piece of land that suddenly appears, congregant loans might be a short term, temporary solution. Even then, there are many issues to consider before seeking congregant loans.

Building Fund, Capital Campaign Commitments, and Personal Loans

Ideally, the congregation will have created a significant building fund in anticipation of this occurrence. And/or they will have recently completed a capital campaign in which enough money was raised to pay for a renovation project or to make a down payment on a building or piece of land. If the congregation exhausts its building fund and completes a capital campaign but more money is still needed, lay leaders may seek congregant loans. It is important to note that, in this scenario, the possibility of seeking loans should not even be considered until all of the capital campaign contributions have been committed. For obvious reasons, it is far better to receive contributions rather than asking for loans.

If seeking loans is determined to be an option, lay leaders should have personal conversations when asking for these loans. We do not recommend that a broadcast all-call for loans be issued. These loans must be formally documented in a legal contract between the lender and the congregation. There must be a specific pay back plan and the contract must indicate the source of the loan repayment.

Debt Service

Annual debt payments, including other existing loans, should not exceed 25 percent of the congregation’s annual operating income.  Historically, some congregations have been able to service a debt that exceeds 25 percent of their operating income. However, many have had to focus so much time and energy on servicing their debt that they have lost sight of their vision and mission.  Use a cash flow projection worksheet to project congregational income and expenses for the next five fiscal years. The worksheet provides a format for calculating the impact of debt service on an operating budget.

Spiritual and Financial Relationships

Accepting loans creates a very different relationship between congregants and the church. Those who lend money now have a financial, business-oriented relationship in addition to their spiritual or pastoral relationship. This new, more complex relationship changes the dynamics of congregational life in ways that may seem too corporate-like for some congregants. In fact, congregations report that sometimes these lenders feel that they are more entitled to be heard because they have a vested financial interest in the church.

Interest Rates

If you decide to accept congregant loans, establish an interest rate that is a bit lower than that being offered by local banks. In this way, the congregation will have more money to use than if they had taken a bank loan with higher interest. For this reason, lending money to the congregation may be a bad investment for any congregant who needs to maximize investments or who might need money before the loan repayments begin. Always encourage congregants to talk with an investment advisor to determine if lending money to the congregation is an appropriate type of investment for them.


Do not expect that some lenders will convert their loan to a gift at the end of the term. Loan repayments must be budgeted as loans to be repaid as scheduled.


There is only one situation in which we recommend seeking congregant loans. When a congregation is planning a renovation or shopping for a new spiritual home and when capital campaign contributions are insufficient, accepting loans from a very few congregants may be a viable option. However, there are many concerns that need to be addressed before accepting these loans.

About the Author
Wayne Clark


  1. Jessica Milstead

    Important and useful advice, especially that about using loans to cover a shortfall in the operating budget. This just pushes the deficit into following years in the (usually vague) hope that things will be better then, allowing both current expenses and debt service to be covered. I’ve saved this post for future use.

  2. Sandy Sladen

    The article mentions a cash flow projection worksheet “below” but I do not see a link. Is it possible to get such a worksheet?
    Thank you.


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