by Marie
(Arkansas)
We have allowed members to borrow money from the church without interest. They pay the loan back.
I wanted to know if this is legal? When they pay the loan back how should I account for the loan?
I show as a debit as a loan and credit it as an reimbursement in income account.
1Comments
Loans can create risks to the church
VVickey
Some states do not allow nonprofit organizations to loan money to employees or members of the organization. In those states it could possibly be a criminal offense. Check your state laws.
See more on that is one of my previous replies:
https://www.freechurchaccounting.com/loan-from-general-fund-to-pastor.html
Frank Sommerville explains what additional risks a church could face with loaning church members money in this reply to this question: No-Interest Loans...
https://www.churchlawandtax.com/web/2010/february/no-interest-loans.html
See more on that is one of my previous replies:
https://www.freechurchaccounting.com/loan-from-general-fund-to-pastor.html
Frank Sommerville explains what additional risks a church could face with loaning church members money in this reply to this question: No-Interest Loans...
https://www.churchlawandtax.com/web/2010/february/no-interest-loans.html