Posted by seth_ia on February 20, 2014 at 06:33:59 from (216.248.85.179):
In Reply to: line of credit posted by dmiller on February 15, 2014 at 16:04:00:
If you have a good plan and decent credit you"ll be fine. One thing I have noticed is that part-time farmers tend to wait until they NEED an opperating loan before they go and try and get one. I would suggest it"s easier to start with a small opp loan when you may not techinically even need it so that you build a good relationship with a banker before you hit them up for big money. With that said, my experience is that bankers love farmers with off farm jobs. The other thing that they like is row crops. If you have row crops they will require you to have federal crop insurane so they know that they have themselves covered. The hay will be the hardest part to finance most likely since there is no insurance. Some bankers might want detailed production history and sales records from the past years on the hay since it has no federal crop insurance paper trail.
I firmly beleive everyone that is farming on any scale needs a good relationship with there banker. However that doesn"t mean you should borrow all your money from them either. Get a line of credit approved at the bank FIRST and then start checking rates on supplier financing. In this age of low interest rates there is no reason to finance things like seed through a bank if your at all limited on your credit line. All the major seed companies offer some form of financing that will be cheaper than what ever your bank is charging. And from what I have seen, they have very low credit standards. Similar many fertilizer dealers have similar financing as well. Usually these kind of input finance deals are ran through farm plan or a similar company.
Like Jim mentioned in his post, paperwork is part of the deal with any loan. A balance sheet, projected cashflow/budget, and Previous years income/expense statment are the minimum. Some, but not all lenders like a marketing plan. And their is some variation in how each individual lender wants the documents prepared. For example FSA has some quarks about their Balance sheet compared to how my local bankers wants it. So talk with any prospective banker and see just EXACTLY what each requires and how they want it prepared.
Finally if all else fails at the local banks FSA will give you an opperating so long as you have a good plan. However they have MORE papar work than what a typical bank will require and there are some headaches. But even the headaches, FSA is still worth it for their low interest rates compared to other last choice lenders.
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