What are financial ratios?
When evaluating a loan application, Foundation Capital Resources looks at a variety of factors including two key financial ratios. These ratios are designed to provide an accurate picture of the church’s ability to service its loan. The first and most important ratio is the debt service ratio. The annual debt service (all monthly payments x 12) is divided by the church’s annual operating income (regular tithes and offerings only, NOT designated income like missions, departmental, etc.). The second ratio is the collateral ratio, also known as loan to value (LTV), which is calculated by dividing the amount of the loan by the value of all buildings and land.
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