Flexibility in ag lending refers to the ability and willingness of a lender to tailor loan terms and repayment schedules to accommodate the specific needs of a farm and ranch borrower. Flexibility in loan terms can be especially important in the agricultural industry, where factors such as weather, crop yields, and market prices can vary greatly from year to year.
Examples of How Flexibility Can Play a Role in Farm Loans
Customized Repayment Schedules: Agricultural lenders may be willing to work with borrowers to develop repayment schedules that align with their cash flow needs. For example, a borrower may request payment timing that takes into account their anticipated revenue from crop sales. Ag lenders may be willing to work with borrowers to develop a plan that fits their specific circumstances.
Loan term adjustments for agricultural lending: Another way ag lenders offer flexibility in ag financing is by tailoring loan terms to match the lifespan of the asset being financed. For example, lenders specializing in land loans typically offer loan terms longer than loan products made by equipment lenders.
Collateral Options for Farm Loans: Agricultural lenders may also offer flexibility in collateral requirements for farm loans. Depending on the borrower’s situation and loan type. For instance, a crop operating lender typically accepts the value of crops as collateral for a loan, rather than requiring a physical asset such as land. This approach enables borrowers to use their current assets as collateral, as an alternative to securing the loan with additional assets.
Flexibility in agricultural lending is important to providing borrowers with the financing they need. By offering flexible loan terms and repayment schedules, agricultural lenders can help borrowers manage the unique risks and challenges of the industry, while still providing the financing they need.
Conterra Ag Capital focuses exclusively on agriculture, providing traditional farm and ranch loans, development and alternative lending to America’s farmers, ranchers and agribusiness. As a private lender, Conterra has flexible farm loan programs available to meet the needs of producers.
Disclaimer: Please note that the information provided in this article is for educational and informational purposes only, and should not be construed as financial or investment advice. While we have made every effort to ensure the accuracy and reliability of the information presented, Conterra Ag Capital and its affiliates make no representation or warranty as to the completeness, correctness, timeliness, suitability, or validity of any information contained in this article. You should always consult a qualified financial advisor, tax professional, or other qualified professional for advice on your specific financial situation.
