Schedule a call
Schedule a call

How much ministerial debt is too much debt?

How much ministerial debt is too much debt?
April 13, 2021 | by BELINDA WHITFIELD

Lenders use a formula called the Debt Coverage Ratio to determine whether a ministry’s debt is reasonable or too high.  The Debt Coverage Ratio compares the borrower’s annual net income (excluding mortgage interest and depreciation) to the annual debt payments as ministerial debt.

Basically, lenders like to see the ministry’s annual net income be anywhere from 10% to 25% more than their annual debt payments.  This means you have enough to cover your debt payments plus you will have an extra 10% to 25% left over for cash reserves and major purchases.  I recommend the ministry’s net income to be at least 25% higher than the annual debt payments.  This gives you a little more room to work with for expanding your ministry and missions outreach programs as well as to fund new furniture, equipment and/or vehicle purchases.


Belinda Whitfield is a certified public accountant that specializes in serving churches and non-profit organizations. Through her firm, Whitfield & Associates, she provides tax services, accounting and compliance oversight and strategic planning for churches and non-profits throughout the United States.

We help churches and non-profits get organized, get in compliance and get control of their finances.
Whitfield & Associates LLC
550 E Boughton Rd. Ste 225
Bolingbrook, IL 60440
Copyright: Whitfield & Associates LLC 2023