Reevaluating a farm operating loan or farm capital lender, or choosing a new one, can be a tricky undertaking. There are many factors to consider, but it all boils down to this: The right choice for a farm’s operating loan is the lender who can get farmers more than just the lowest interest rate—it’s the lender who can help farmers transform their businesses.
But transformation isn’t easy, especially when tradition gets in the way.
For years, the so-called traditional lender-borrower model has been the same: Show us how much land and other hard assets you have (i.e., how much equity), and we’ll show you how much money we’re willing to lend you.
Is It Time for Your Farm Business to Look Beyond the Local Bank?
Unfortunately, for many young and expansion-minded farmers who utilize primarily rented ground, sticking with the same lender their parents or grandparents used isn’t the best choice—or sometimes, even an option. That’s when it’s time to move from a “traditional” way to borrow farm operation capital to one that is transformational—to go from balance sheet-based operating loans to crop production-based operating loans.
Production-based loans allow additional flexibility to farmers who primarily rent ground or have not accumulated enough capital for traditional loans. Rather than looking at land or hard assets which can be used as collateral, production-based loans—like those offered by FarmOp Capital —rely on risk management practices and crop production potential to determine the strength and size of potential operating loans.
What if You Could Call the Shots on Farm Risk Management Strategies and Borrow More Cash?
Farmers who work with FarmOp Capital continue to call the shots, choosing their level of crop insurance as well as a commodity marketing plan. They can continue to work with the crop insurance agent of their choice and may create a marketing plan with a FarmOp Capital-approved trade advisor. The farmer’s risk management strategies then serve as a major portion of the collateral for operating loans. Better yet, some costs associated with crop insurance and marketing strategies may even be included in farmers’ loans.
What’s more, FarmOp Capital loans can stretch anywhere from 18 to 24 months, giving farmers a wider window of opportunity to plan for the crop year, sell their crop when it’s most profitable and take advantage of early input order discounts. This unique structure allows FarmOp Capital to help farmers grow their businesses by providing up to 100% of the loan amount requested at a fixed rate.
But as they say, the proof is in the pudding—in this case, the quote from the lender and the speed at which farmers can get it, as well as superb ongoing service and support.
Want to Work with a Lender Who is Focused on Your Farm’s Growth and Potential, Not Your Past?
Working with a FarmOp Capital specialist, farmers interested in obtaining an operating loan quote will first review the real cost of their current operating loans and other lines of credit offered by third-party lenders. FarmOp Capital specialists also will help borrowers evaluate their interest and potential, verify pre-application items and collect information on crop plan types, acres farmed, APH and projected yield, insurance levels, total budget, total assets, owners’ equity and working capital.
To help provide farmers with accurate information quickly, FarmOp Specialists will then utilize FarmOp Capital’s QuickQuote tool to give the farmers a nonbinding operating loan quote in as little as 48 hours.
We’re ready to answer all your “What Ifs?” Click here to receive a personalized Quick Quote from FarmOp Capital within one business day.