Numbers a lender looks at when considering a church loan – audit or review of the financial statements

Where will the loan officer get the numbers for calculating those ratios when deciding whether to give your church a loan?

That’s where those financial statements from your CPA come into play.  The loan officer will go to those financial statements for last year and pull out the numbers.

This is where the question of having an audit or review comes into the discussion.  Several years ago banks required audited financial statements for just about all loans.  That is slowing changing.

Some banks are allowing reviews for loans below a certain amount.  Some are even allowing compilations for smaller loans.

You’ll have to check with your lender for their policy.

What I am hearing is that audits are typically required for loan balances over 5 million.  Below that cut off a review of the financial statements may be sufficient.  Some lenders are even allowing a compilation report if the loan balance is below 1 million.

Ask your bank if reviewed financial statements are acceptable.  Ask your CPA to look at this question as well.  Might be worth pushing the question.  You would realize substantial savings in hard cost and staff time if you can shift from an audit to a review.

Typical cutoffs:

  • audited financial statements – loan balance over $5M
  • reviewed financial statements – loan balance under $5M
  • compiled financial statements – loan balance under $1M

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