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Your project budget should include all hard and soft costs.

Hard costs are the construction-related costs. If you do not have actual bids from contractors, you can estimate your costs based on a typical cost per square foot. Architects, contractors and lenders know typical costs for various types of structures. Also, be sure to include funds for seating, furnishings, lighting, and audiovisual items.

Soft costs are often overlooked; they include permit fees, soil testing, inspection fees, state documentation taxes, engineering fees, etc.

Your budget should also include costs related to preparing your site. Site work may include grading, retaining walls, environmental remediation, retention ponds, or demolition of existing structures.

Architect's fees and other design expenses should be identified separately from other development expenses.

Many banks will require that a qualified cost engineer review your budget and specifications for the project, to ensure that your project can be constructed for the specified contract amount.

Most lenders will ask you to prepare a Sources and Uses statement, detailing how you plan to fund the project, and how the funds will be spent. Tips for creating a statement are listed below. This type of budget will help you make an appropriate representation to your lender, and will help your church get a handle on the cost elements of your project.

Tips for filling out a Sources and Uses Statement:

• If you have recently acquired a site, the lender will want to know the actual cost of the site and the date it was purchased.
• The City or County may require you to lay new roads, install turning lanes or streetlights, or install utility lines. Be sure to research these items when you are putting your budget together.
• The "Cash Spent" amount should include all expenses incurred so far on items in the "Uses of Project Funds" categories. Be sure to include the date of this calculation.
• The lender will want to know your actual cash on hand as of the date of your application. Only include funds that are available for the project; do not list funds that are committed to other uses.
• You may include a reasonable projection of the additional cash you anticipate receiving prior to loan documentation. The lender's financing commitment letter may require that you have that cash before the loan is documented.
• If you plan to sell an existing facility to generate the required funds, the sale must be completed before the loan documents are executed. Otherwise, the funds should not be considered as a reliable "Source".
• To determine the amount of debt required to complete your project, start with the Total Uses figure and subtract all other Sources figures. That will be the amount your church seeks to borrow.
• The Total Sources figure and your Total Uses figure must be an identical amount.

Call 1-800-927-6775 for more information.