A coalition of minority-owned banks is organizing a loan fund to finance the rebuilding of black churches razed in the recent rash of arson fires across the South.
Members of the National Bankers Association committed last month to amassing a $5 million fund to make loans for the felled churches, many of them in rural, poor minority communities.
National Bankers, a group of minority and women bankers, hope the loan fund and federal government guarantees will help the churches rebuild, and in some cases improve, their facilities.
"We had to respond to the need of the churches," said trade group chairman Louis Prezeau, who is chief executive of City National Bank in Newark, N.J.
Mr. Prezeau said that for him, helping rebuild African-American churches was a way of returning the good will given to his bank by religious organizations in Newark - and a good business opportunity.
"City National was formed with tremendous support from the community and local churches," he said. "In the 23 years we have been making loans to churches, we haven't lost a penny."
The fund will work as a loan-participation pool. A church can contact National Bankers in Washington, which will put it in touch with a nearby member bank. The member bank will then evaluate the loan and parcel it out to the other banks in the fund.
In addition, trade group members hope to use a $10 million loan guarantee fund administered by the Department of Housing and Urban Development. The guarantee, provided for by July legislation in response to the church burnings, will allow banks to make below-market loans to churches.
The programs are part of a wellspring of efforts to help rebuild the affected churches. National Bankers, HUD, Habitat for Humanity, the National Council of Black Churches, and other nonprofit organizations have formed a task force to rebuild the churches and help them establish lasting financial relationships.
"Many of the affected churches do not have insurance, and (thus have) no pre-existing relationship with a bank," said HUD Assistant Secretary Andrew Cuomo. Many such churches do not know how to access a loan guarantee fund, and with an income stream dependent on their congregations' generosity might have a hard time trying to secure a loan to rebuild.
Tri-State Bank of Memphis offered Truelight Missionary Baptist Church a $50,000 loan at 4.5%, using the HUD guarantees, and hopes to make it a part of the National Bankers fund. However, the loan has not been approved yet, said Jesse Turner, president of Tri-State and an association member.
"Tri-State is a very heavy lender of church loans, particularly to black churches, and we have never lost any money on a church loan," he said.
Churches, he said, make extremely good customers because of the commitment of local pastors and deacons. "That group of people takes their fiduciary obligation very seriously," he said.
Regarding the HUD guarantee, Mr. Turner said the trade group was already committed to helping the churches rebuild. "The HUD guarantee makes it easier for us to do that at subprime rates," he added.
Mr. Turner stressed that a loan would not be made if it is felt "the church cannot pay the note."
