Frequently Asked Questions

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  1. Why do Churches issue bonds?
  2. Which Church denominations issue bonds?
  3. What criteria are used in approving Church financing?
  4. How does a Church repay interest and principal on its bond issue?
  5. Are Church Bonds safe investments?
  6. What are First Mortgage Church Bonds?
  7. In what amounts can Church Bonds be purchased?
  8. Will the interest income vary in amount?
  9. How do interest yields on Church Bonds compare with yields offered on other types of investments?
  10. How long can money be invested in a Church Bond?
  11. When is the amount invested paid back to the bondholders?
  12. Do investors pay a commission when purchasing a Church Bond?
  13. Are Church Bonds a marketable investment?
  14. What is a Book Entry Bond?
  15. What happens when Church Bonds mature or are called?
  16. Where can Church Bonds be purchased?

Answers:

01. Why do Churches issue bonds?
Churches issue bonds for various reasons such as: financing new construction, expanding existing facilities, refinancing an existing debt, or for major capital purchases. Long term financing can provide your Church with fixed payments protected from unstable market conditions.

02. Which Church denominations issue bonds?
All denominations issue bonds; however, Share Financial Services, Inc. (Share) only serves Churches dedicated to strengthening the moral foundation of America and promoting Christian spiritual principles. Once this is established, the Church’s quality of credit determines which loans are selected for underwriting and offered to investors.

03. What criteria are used in approving Church financing?
Through years of experience, Share has developed conservative criteria for sound Church financing such as: minimum per-member giving ratios, past history of growth, and favorable percentage of Church equity to proposed debt.

04. How does a Church repay interest and principal on its bond issue?
Churches deposit a portion of it’s weekly or monthly income into a sinking fund account at the paying agent bank to ensure orderly payment of principal and interest to bondholders. Churches agree in advance that the sinking fund payment on the church bond issue will be made before other operating expenses are paid.

05. Are Church Bonds safe investments?
Share has underwritten hundreds of issues over the years and has an outstanding record; however, no one can guarantee the safety of any investment. Share’s loan origination process and due diligence utilize industry standard ratios and principles.

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06. What are First Mortgage Church Bonds?
First Mortgage Church Bonds constitute a promise to pay principal and interest and are secured by a first mortgage lien on the property of the issuing Church.

07. In what amounts can Church Bonds be purchased?
Bonds are normally available in multiples of $1,000 in fully registered form however, Share offers Church Bonds at a minimum of $500, and $250 multiples thereof, for an IRA, Roth IRA and custodial accounts.

08. Will the interest income vary in amount?
The interest rate on the specific bond purchased is fixed. Interest on Simple Interest bonds are payable either quarterly or semi-annually until the Church Bond matures. Interest on Compound Interest bonds are payable at the time the bond either matures, or is called and prepaid.

09. How do interest yields on Church Bonds compare with yields offered on other types of investments?
Generally, Church Bond interest yields are higher than yields offered on other corporate bonds or returns offered on most savings instruments.

10. How long can money be invested in a Church Bond?
Most Church Bond issues are set up with serial maturities. In a serial maturity, the issuer establishes a principal repayment schedule so that each bond matures on a specific date over a period of years until the entire balance has been repaid. With Church Bonds underwritten by Share, investors have the option to choose a maturity between 6-months to 25 years.

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11. When is the amount invested paid back to the bondholders?
Usually the amount invested is paid back to the bondholder at the stated maturity date. However, Church Bonds may be called and prepaid by the issuer prior to the maturity date, at which time the bondholder receives the entire principal amount originally invested plus interest up to the call date.

12. Do investors pay a commission when purchasing a Church Bond?
The investor pays no commission in the purchase of Church Bonds. Share is paid by the Church issuing the Church Bonds.

13. Are Church Bonds a marketable investment?
Neither the Church or the Church Bond trustee is under any obligation to call and prepay a bond prior to the stated maturity date. However, for a standard 5 percent brokerage commission, Share may be able to assist the bondholder in selling their bond prior to the maturity date.

14. What is a Book Entry Bond?
Most bonds are purchased as “book entry” to relieve bondholders from the responsibility of holding a Church Bond certificate. Interest payments and principal payments are scheduled to be automatically sent to the bondholder. Although a registered certificate may be obtained, Share highly recommends purchasing Church Bonds in book entry form.

15. What happens when Church Bonds mature or are called?
At maturity, “book entry” bonds will automatically be paid to the bondholder. “Certificate” bonds must be mailed to the trustee bank. At that time, the trustee bank will remit a check for the amount of the bonds plus any interest due. The trustee bank notifies registered bondholders if their Church Bonds are called.

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16. Where can Church Bonds be purchased?
Church Bonds underwritten by Share can be purchased from Martin Northern, Vice President and Registered Representative by calling (501) 316-3100, toll-free (800) 468-3007, or by email at mnorthern@sharefinancial.com.  Martin Northern only services clients in certain states where properly licensed.