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​​6.5.3 Loan Application Loan Application Process

After all requirements for construction and/or real estate purchases are met, the location or department may apply for a loan when it has sixty percent (60%) of the total costs of the project or purchase on deposit in an Investment Pool account and the remaining forty percent (40%) in pledges​. The Archdiocesan Catholic Center may provide a five-year loan based on written pledges to cover the balance, discounting for uncollected pledges. Some pledges may be confirmed. Interest at the then-applicable rate is applied to the loan.

When applying for a loan for any purpose, the person in charge addresses a letter to the regional bishop that:

  • Requests the loan and the amount needed

  • Describes the purpose(s) for which the loan is sought

  • Indicates the total projected cost of whatever project or purchase is being considered

  • Provides all current capital campaign information, other fundraising information, special collections, or grants

  • Includes any other information that the person in charge feels is important Approval Process

Regional Bishop

If the regional bishop recommends approval of the loan, he will forward his recommendation to the chief financial officer (CFO) with a copy to the director of financial services. If the regional bishop does not approve of the loan request, he will so inform the person in charge.

Chief Financial Officer

Upon receipt of the regional bishop's recommendation, the CFO or the director of financial services will check to ensure information/documentation has been provided by the location prior to considering the loan request.

A cash flow analysis should indicate the following:

  • The total projected cost of the proposed project or purchase

  • The total amount of cash on hand to begin the project or purchase (including all Investment Pool accounts as well as any location bank accounts, the funds of which are restricted for the proposed project or purchase)

  • All capital campaign and other fund​raising information, including special collections and grants specifically given for the purpose of funding the project or purchase

  • If the loan concerns a construction project, all approvals required as identified in the construction Project Checklist

The archdiocesan Financial Services Group reviews the loan request and financial documentation and prepares a project preliminary cash flow analysis based on the financial information submitted. It may be necessary for the person in charge to schedule an appointment with the CFO or his or her delegate to ascertain further information and/or to discuss financing options.

The person in charge and the regional bishop will be informed of the decision.

When a loan request is approved, the borrower is extended a line of credit/term loan and will receive a letter agreement, stipulating the approved budget, the line of credit/term loan amount, the repayment terms, the initial interest rate, and any conditions of approval. Loan Terms

The maximum available line of credit/term loan is forty percent (40%) of the total project or purchase cost or five (5) million dollars, whichever is less. The location must have a minimum of sixty percent (60%) of the total project or purchase costs as cash on hand. The interest rate for lines of credit and term loans varies, but it is benchmarked to the U.S. Treasury constant maturity index plus one and one half percent (+1.5%).

Term loans are for five (5) years. Term loan payments are amortized over the life of the loan and include both principal and interest payments, billed and payable monthly.

Lines of credit are provided for construction projects only. All payments on loans shall be authorized as automatic direct debits from the location's designated bank account or Investment Pool​ account.

For construction projects, the archdiocesan loan is structured in two parts. During construction, the loan is a line of credit; upon completion of construction, the line of credit is converted to a term loan with amortized monthly payments. The borrower may draw upon the line of credit up to the approved loan amount or the completion of construction, whichever occurs first. During construction, draws on the line of credit are charged interest only. Interest rates for lines of credit are adjusted twice a year and interest is billed and payable monthly, until the line of credit is converted to a term loan. ​ External Loans Prohibited

​Locations are not allowed to apply for loans from any financial institution, any individual, or any organization that is not the archdiocese.