RCAB Office of Parish Services Parish Financial Services. Revolving Loan Fund Information Pack

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1 RCAB Office of Parish Services Parish Financial Services Information Pack

2 RCAB Parish Financial Services Information Packet Thank you for your recent inquiry regarding the process. This material is designed to give you a brief overview of the process and provide you with some preliminary information. Included in this packet are: RCAB policy regarding savings and loan accounts Planning considerations before requesting a loan A schedule of services that our office provides to you and your parish The common steps in the progression of a loan request A sample timeline in the life of similar loan requests A glossary of terms common to the A Loan Application Form An ACH/Wire Request Form Once you have had an opportunity to review this material, please contact Mary Ryan or Christine Ficarra at the Parish Financial Services Department so that we may answer any questions or assist you should you wish to proceed with a loan application. Mary Ryan Christine Ficarra (tel) (tel) mary_ryan@rcab.org christine_ficarra@rcab.org We hope that this information will be of value and we look forward to the opportunity to assist you. Page 1 of 10

3 Purpose and Objectives RCAB Parish Financial Services Policy Regarding Savings and Loan Accounts The is intended to provide parishes, as well as schools and other Catholic organizations operating under the auspices of the Roman Catholic Archdiocese of Boston (RCAB), with savings and loan services. This fund provides a vehicle through which parishes and other institutions within the archdiocese can aggregate funds to earn interest and to assist other parishes/institutions with loans. The has two components: 1. Savings facility provides an opportunity to deposit funds at a competitive rate while providing funds for other parishes and institutions to borrow. 2. Loan facility makes funds available for capital projects and operational needs to parishes and other archdiocesan organizations at competitive rates. The rates, terms for loans, and procedures to request financing are described below. Eligibility The is made available to all parishes as well as schools and other Catholic entities operating as part of RCAB. Loans will be made available based on an evaluation of the request and the ability to repay. Savings Deposits and Withdrawals Deposits earn interest at a rate that compounds daily. Checks should be made payable to RCAB and mailed to: Cashier RCAB Accounts Receivable 66 Brooks Drive Braintree, MA Withdrawals with the signature of the pastor/administrator may be made by check or electronic transfer. Please mail requests to: Mary Ryan Parish Financial Services 66 Brooks Drive Braintree, MA Requests may also be faxed to Mary Ryan at Requests for withdrawals from legally restricted accounts will include confirmation that the restrictions are being satisfied. Page 2 of 10

4 Loan Payments & Terms 1. Interest will accrue on funds as they are drawn down and for the term they remain outstanding. 2. Loan principal and interest payments are to be made monthly or as determined by the loan agreement. 3. Payments are applied first to accrued and unpaid interest and then to principal. 4. Loan terms shall not exceed 15 years. 5. All funds designated for a project in a savings account are used before the loan is initiated. 6. Payments may be made by check or automated debit. Checks should be made payable to RCAB and mailed to: Cashier RCAB Accounts Receivable 66 Brooks Drive Braintree, MA Deposit and Loan Rates Deposit and loan rates are available by calling Mary Ryan at Page 3 of 10

5 RCAB Parish Financial Services Planning Considerations Before Requesting a Loan In the event the parish is requesting a Capital Improvement or Construction Loan, the parish will need to follow the guidelines set forth in Policies and Procedures for Construction, Renovation and Maintenance Efforts. Capital improvement or Construction loans funded through a Capital Campaign will need to have in donor pledges at least 75% of the anticipated project cost and have collected at least 50% of the anticipated project cost in cash. Operating Loans will need to have sufficient cash flows to fund the projected principal and interest payments on the loan. Loans funded by a Capital Campaign or by real estate transactions will need to be supported as to the expected timing and probability of proceeds. Page 4 of 10

6 RCAB Parish Financial Services Schedule of Services The Revolving Loan Office and Parish Financial Services provide the following services and assistance to the parish: For loan applicants: 1. Parish Financial Services reviews the parish financials, undertakes a thorough assessment of the parish, and provides recommendations that may be beneficial to the parish in its management of the project, its debt, and future financial planning. 2. Revolving Loan Office prepares a report with the final recommendation to the Director of Parish Financial Services. 3. Additional approvals, if needed, are obtained. If additional recommendations or approvals are needed, the Director of Parish Financial Services obtains these approvals. 4. Once approved, the Revolving Loan Office prepares the loan agreement and presents it to the pastor/administrator for signature. The loan agreement may be reviewed with the pastor and Parish Finance Council. Parish Financial Services can assist with any presentations to the Finance Council. 5. Funds are then made available to the parish within the terms and conditions established. For all members: The Office will provide monthly savings and loan statements. Each participant receives monthly statements reflecting all activity for the month (accrual of interest, payments of principal and interest, etc.). Page 5 of 10

7 RCAB Parish Financial Services Common Steps in the Progression of a Loan Request Step 1 The pastor or his designee completes a Loan Application Form and submits it to the Director of Parish Financial Services. As part of the request, the pastor includes the following information: Step 2 1. The amount of money the parish wants to borrow 2. Purpose of the loan 3. How the parish is going to repay the loan If a project is a capital improvement or construction project, this step includes confirmation of compliance with the required construction guidelines as well as implementation of a capital campaign, where applicable. Step 3 Parish Financial Services reviews the request and works with you in determining the scheduled payment amount based on the term of the loan and interest rate if repayment is from operations or another stream of funding. If Capital Campaign or real estate proceeds are used, the repayment timing will be specified. Step 4 The Director of Parish Financial Services reviews the recommendations, makes a recommendation/decision, and approvals are obtained. Step 5 The parish is notified of the approval. Upon acceptance of terms, the agreement is executed and funds are made available. Step 6 The parish commences the loan principal and interest payments on a monthly basis or as determined by the loan agreement. Page 6 of 10

8 RCAB Revolving Loan Office Revolving Loan Application Sample Timeline Parish submits loan request Review of loan request and financial information Director makes decision on loan approval Parish receives loan approval Preparation and execution of loan Funds available to parish 3 days 8 days 4 days 3 days 3 days General Progression is 21 days from start to finish. Please note: this is an average timeline. Actual progression can take longer depending upon approvals needed. Page 7 of 10

9 RCAB Parish Financial Services Glossary of Terms Capital improvement This is the addition of a permanent structural improvement or the restoration of some aspect of a parish property that will either enhance the property's overall value or increase its useful life. Eligibility - The is made available to all parishes and other archdiocesan organizations. Loans will be made available based on the request and the ability to repay. Interest rate - The interest rate is the rate charged or paid for the use of money, expressed as an annual percentage of the principal. The Revolving Loan rates at which interest is paid on savings and charged in the loan fund is reviewed regularly and adjusted in order to maintain competitive rates in the marketplace. The interest rates are evaluated using such indicators as the Prime Rate, the LIBOR rate, and savings and loan rates from financial institutions. Prior to the effective date of a rate adjustment, the Chancellor's Office will issue a notice to all Archdiocesan organizations informing them of the upcoming interest rate adjustment. Current interest rates are available by calling Mary Ryan at Internally designated funds - The parish designates funds for an intended purpose and the designation can be changed by the parish. Legally restricted funds These are funds that the donors have intended to be used for a purpose such as Capital Campaign, Promise for Tomorrow, or specific scholarships. Loan facility Funds are made available for capital projects and operational needs to parishes and other archdiocesan organizations at competitive rates. Loan principal The outstanding amount that has been or can be borrowed without including accrued interest. Loan term This is the length of time the loan is in place. Savings facility Funds can earn interest at a competitive rate while providing funds for other parishes and institutions to borrow. Unrestricted funds - These are savings of the parish that can be used for any purpose. Page 8 of 10

10 Roman Catholic Archdiocese of Boston Loan Application Form Name of Parish/Institution: Pastor/Administrator Name: City/Town: Phone Number: Estimate project cost (if applicable): Requested loan amount: Funds on hand for project (if applicable): Purpose of loan: Type of loan applying for: Operating loan Capital loan project(s) Increase to existing loan Source of repayment: i.e., capital campaign, sale of property, etc. Repayment: Indicate your requested repayment plan: Number of years: Payments: Monthly Quarterly Annually Statistical Information: Average Sunday Attendance: Active Baptized Members: Are these numbers: Increasing Stable Decreasing Please attach (if not already provided to Facilities Management Department): 1.) Parish profit/loss and balance sheet statements for last three years 2.) Parish operating and capital budget for current year 3.) Documentation on consultation with Parish Pastoral Council and Finance Council Signature of Pastor Date For office use only: Date received Financial statements received from parish Operating budget received from parish Capital budget received from parish Promissory Note issued to parish Page 9 of 10

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