Church Asks Senior Members To Cosign For A $2.3 Million Expansion Loan, Dave Ramsey Says 'No Way I'm Doing This'

Radio personality and finance guru Dave Ramsey recently posted a clip on X where a caller, Jim, stated that his church was asking him to cosign a $2.3 million expansion loan. Right off the bat, Ramsey strongly advised against it. 

"Well, I'm kind of weird," Ramsey said. "I think churches ought to follow what the Bible says. And 17, 18 Proverbs says, ‘One lacking in sense cosigns for another.'" He stated that especially as a religious institution, a church should not be asking this of its members. 

Don't Miss:

• Many are using this retirement income calculator to check if they’re on pace — here’s a breakdown on how on what’s behind this formula.
• Can you guess how many retire with a $5,000,000 nest egg? The percentage may shock you.

Ramsey consistently discourages people from cosigning loans, as it exposes individuals to unnecessary risk and can ruin relationships. 

This isn't the only occurrence of a Ramsey Show personality talking about cosigning for church expansions. Co-hosts Ken Coleman and George Kamel also took a call where the caller described how his church was pursuing a $3 million loan to fund a building project. 

The caller explained how the church received weekly offerings of $15,000 but still needed someone to cosign a loan that would hold them personally liable for monthly payments of $17,000. As a leadership team member at the church, the caller was uncomfortable with the idea of this and said it threw up some red flags for him. 

See Also: Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – You can still get 4,000 of its pre-IPO shares for just $1,000

Kamel and Coleman questioned why the church would seek personal guarantees from its members if its financial health were truly stable. "The reason they need they guarantors is ‘cause the lender doesn’t believe the church has the finances to pay the loan," Kamel stated.

Coleman agreed and emphasized that church leadership should not be shifting financial responsibilities onto its members, particularly for commitments that the church should be able to manage. Drawing from his own experience in church environments, Coleman said that it's easy for well-intentioned leaders to get excited about growth opportunities, but that this enthusiasm shouldn't come at the financial risk of the congregation. 

Trending: This Adobe-backed AI marketing startup went from a $5 to $85 million valuation working with brands like L'Oréal, Hasbro, and Sweetgreen in just three years – here's how there's an opportunity to invest at $1,000 for only $0.50/share today.

Churches in the U.S. regularly seek loans for building expansions, renovations, and other large projects. Since churches often rely on fluctuating donation income, lenders may hesitate to issue large loans without additional financial security, such as a cosigner. While some lenders specialize in church financing and might not require a personal guarantee, others see cosigners as essential to mitigating risks, especially for projects over $1 million. 

According to AGFinancial, a lender specializing in church loans, ensuring stable church leadership, adequate equity, and a consistent cash flow are prerequisites for a successful loan without additional personal guarantees. If a church does not meet these standards, lenders may insist on a cosigner to bridge financial uncertainties.

Trending: According to Vanguard’s Advisor’s Alpha Study, working with a financial advisor can result in approximately 3% higher net returns annually, here are the benefits of partnering with a financial advisor and how to find the right one near you in minutes.

Asking congregation members to cosign a loan is generally seen as risky and ethically debatable, especially in religious contexts where members are encouraged to give freely rather than take on financial liabilities. Legal concerns also arise; in some states, it may be difficult to enforce repayment against cosigners if the loan defaults, potentially leaving individuals with significant debt and legal complications. 

Prominent church finance experts, like attorney Richard Hammar, suggest that churches avoid loan practices that could lead to financial and relational strain among members, advising them to pursue financially sound loan terms without needing personal guarantees.

For these reasons, advisors like Dave Ramsey and others typically recommend churches approach expansion projects cautiously, thoroughly assessing their long-term financial stability before borrowing, and ideally, avoiding situations where cosigners are required.

Read Next:

• Studies show 50% of consumers think Financial Advisors cost much more than they do — to debunk this, this company provides matching for free and a complimentary first call with the matched advisor.
• ‘Scrolling to UBI': Deloitte's #1 fastest-growing software company allows users to earn money on their phones – invest today with $1,000 for just $0.25/share