Church Bond FAQs

Frequently Asked Questions on Church Bonds

1) What is a BRBC church bond?

Church bonds are certificates of indebtedness issued by churches or other non‐profit organizations to provide funds for the refinancing of our construction loan, through a bond agency (ours is Rives Leavell & Co.)

2) How is that related to our refinancing our loan debt?

BRBC will be selling bonds to the congregation and friends of our congregation in order to gain the funds to pay off the loans we currently have with Wachovia Bank.

3) Is it just for big investors?

No, bonds can be purchased in amounts as low as $250, and in multiples of $250. However, the bigger the amount invested combined with the length of time of the bond, the better the interest and return on those bonds.

4) Will I be able to get my money or will it be tied up?

That depends on the length of your bond. As each bond matures, you will have the choice of receiving the interest payment or reinvesting the entire bond into an additional bond. You should not buy a church bond with a maturity beyond when you think you will need the principal back. Also, in the event BRBC receives increased giving beyond our budget and reserve needs, it can choose to pay off some of the bonds with interest.

5) What is the benefit to me for investing this way rather than a savings or retirement account?

You will receive consistent and regular return on your money, unlike some retirement funds which fluctuate or savings accounts which have low interest rates at the moment. Some people use the money they have been saving for children’s college. Some use inherited money which has to be used for a specific long‐term purpose and cannot be invested in stocks.

6) Is the interest taxable?

Yes, it is taxable as ordinary income and you will receive a 1099 annually for the interest you earned, whether it was paid to you or reinvested.

7) What is the benefit to the church for investing this way?

You will assist the church in paying off the construction loan at a much more cost effective rate. The church will not have to refinance with the bank every three or four years, saving those refinancing costs. Also in this economy it is getting more difficult to obtain refinancing through banks. We can lock‐up our payments and can pay off the loan earlier as money is received over and above our budget needs.

What’s the first step in determining how I could participate?

Look over your financial situation with regard to your own debt, your savings account, and your retirement accounts. If you choose to rollover from your retirement accounts, contact your financial advisor to determine what needs to be done. If you are investing from savings, contact Glenda Snotherly at Rives Leavell (877‐259‐1877) for instructions. She can also give you sample rates of interest and return.

9) Who do I contact to find out what I can do and how to do it?

Contact Glenda Snotherly at Rives Leavell (877‐259‐1877) for instructions.

10) What secures my investment if the church or the bond company go under?

The bonds are secured with the church property and building as collateral (currently $4.5 million). This is explained in more detail in the prospectus you will receive prior to making your final commitments.

11) How long will I have to purchase the bonds?

Once we receive our completed and approved prospectus, Rives Leavell gives us seven days to purchase the bonds. Now is the time to be determining if you will participate. Also, it is quite common and very helpful for the congregation to contact your friends and relatives to see if they want to invest in this way. The more of the $1.3 million that our congregation and our contacts can purchase, the less we will be charged by Rives Leavell for their fees in finding additional investors to reach our need.