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Borrowing FAQ

The Cornerstone Fund seeks to offer competitively priced loans suited to our borrowers’ goals and financial resources — and to give borrowers access to the expertise and assistance of professionals who understand the particular needs of the faith community.

Who can borrow from the Cornerstone Fund?

Churches and organizations affiliated with the United Church of Christ are eligible to apply for loans from the Cornerstone Fund. The Fund does not make loans to individuals.

For what purposes may we borrow?

The Cornerstone Fund was created to help churches expand and address the range of building maintenance needs — from straightforward repairs to large-scale additions or renovations. Borrowers have built new wings, replaced roofs and resurfaced parking lots, enhanced sound systems and installed wheelchair ramps.

How much can we borrow?

Cornerstone Fund loans are available from $10,000 to over $1,000,000, with the amount determined by your church’s capital campaign results and overall financial resources. Generally, loans are approved when annualized payments do not exceed 28% of the congregation’s annual giving, although a successful capital campaign can expand the options for borrowing. Within the Cornerstone Fund’s maximum loan limits, churches can generally borrow up to 50% of the fair market value of the property that will be held as security for the loan. To get a good idea of what your church may be able to borrow, visit the Calculators page.

What kind of loans do you offer?

The Cornerstone Fund offers four different loan programs — including both balloon payments and fully amortizing loans — with both fixed and adjustable rates at terms ranging from five to 30 years. All loans are secured by the borrowing organization ‘s real estate – no personal guarantees or other collateral is required.

Five-Years — Fixed Rate & Balloon Loans
Priced at a market rate, this loan offers payment terms ranging from five to 30 years, depending on your church’s needs. At the end of five years on a balloon loan, the principal balance becomes due. Rather than pay the loan in full, a church may apply for either an additional five-year term at the prevailing interest rate and terms, or for an adjustable rate mortgage with full loan repayment over a longer term. The Fixed Rate loans are eligible for the Interest Rate Rebate program.

Adjustable Rate Mortgages
The Cornerstone Fund offers three fully amortized adjustable rate mortgages – no balloon payments – with terms available from five to 30 years, depending on your church’s needs. All adjustable rate mortgages carry a life of loan cap of 6%; in other words, the interest rate is guaranteed not to rise more than 6% (600 basis points) over the rate set at the loan’s inception. Adjustable rate mortgages are not eligible for the Interest Rate Rebate program.

How are adjustable loan rates calculated?

The interest rate of each mortgage is determined by adding the margin to the index rate for the loan you prefer.

One-Year Adjustable
The rate for this loan is adjusted every twelve months, using the weekly average yield of one-year US Treasury Securities and a margin of 3.25%. At the annual adjustment date, the rate may increase or decrease, but will never change more than 2% (200 basis points).

Three-Year Adjustable
The rate for this loan is adjusted every three years, using the weekly average yield of three-year US Treasury Securities and a margin of 3.50%. At the adjustment date, the rate may increase or decrease, but will never change more than 2% (200 basis points).

What is the Interest Rate Rebate Program?

This program offers borrowers the opportunity to reduce the effective interest rate on a Fixed Rate loan by up to 1%. By investing part of the church’s savings in Cornerstone Fund notes – and by encouraging church members to invest in the Cornerstone Fund as part of a personal portfolio — a borrower may be eligible for a rebate of up to 1%. While each investor retains full control of their investments, the amounts of the collective investments are added together to calculate a rebate that is sent annually to the borrowing church. If a church’s collective investment totals 25% of the loan amount, a rebate check for .25% (¼ of 1%) of the loan amount will be sent to the church each year that the investment balance remains with the Cornerstone Fund. A church with collective investments totaling 100% of the loan amount will receive a full 1% rebate on the loan amount. These funds are in no way considered collateral, and investors may access their investments at any time.

How quickly can we get our loan funds?

Once your capital campaign has been completed, the Cornerstone Fund can help you move quickly to groundbreaking. With a one-year, interest-only construction loan, your church can begin construction while your pledges are paid over time. Once construction is complete, we will convert your loan to an amortizing fixed or adjustable rate loan.

Are we required to invest in the Cornerstone Fund?

Because Cornerstone Fund loans are funded by investments, borrowers are encouraged to match at least 10% of their loan amount with Cornerstone Fund investments. Eligible for the competitive market interest rate for the term selected, these investments are not held as collateral — they simply help the Cornerstone Fund fulfill its objective to serve the broad range of borrowing needs across the United Church of Christ.

What if a local bank makes us a better offer?

At the Cornerstone Fund, we believe we’ve accomplished our mission when UCC churches obtain the best possible financing for their capital improvement projects. Often, our loans offer churches the best deal — but sometimes, your local bank will match or even better our terms. We encourage churches to talk to us and complete a Cornerstone Fund loan application, if for no other reason than to give them leverage in negotiating with other lenders.