Most lenders have in place Business Continuity Plans, but COVID-19 has put them to the test, with varying results. With many states enacting stay at home orders to protect the health of their residents, what remains for many lenders is to move off-site the support functions, consistent with their Business Continuity Plan.
That said, loan-making involves the application and supporting financial information flowing in a timely and secure manner, much of which is dependent on the applicant’s available technology. The vast majority of applicants have at hand the ability to send all needed materials electronically. Much depends on the degree to which the applicant has maintained well organized information.
Other parties are key to the making of a real estate loan. Appraisals are needed, title policies, lien searches, document filing, etc. Not all states or counties have shown the ability to operate remotely, so in some cases loan-making may be slowed. If the offered farm collateral contains a home the appraiser, in the time of COVID-19, would typically not go inside, limiting a portion of the appraisal. The appraiser, in some areas, would often go to the County Recorder’s office to obtain property sales information to compare to the offered farm collateral. That access is now not an option. Nonetheless, the making of loans goes on each day, involving some workarounds that were never considered in the past.
So, what can a loan applicant do to ensure there to be as few hiccups as possible to obtaining a farm real estate loan? As always, much depends on the applicant and their ability to gather the necessary information needed. A complete balance sheet showing all assets and liabilities on a market value basis, including amounts invested in the 2020 crop. Interest rates and payment schedules are needed. Crop insurance levels and historical yields. Even in the best of circumstances this many times holds up the loan approval process. During the pandemic, with many businesses shuttered, it may hinder the ability to gather necessary information. CPA prepared financial statements, tax returns, insurance documents, well tests and other information may be held up due business interruptions or closures. Try to get documents delivered off-site if possible.
Though this may sound a lot more complicated due to the pandemic, it really just requires a jump into the digital world, where most farmers already have a toe hold. And, with rates very low and economic volatility high this is a great time to look at obtaining a real estate loan.
Conterra Ag’s national footprint has staff placed remotely, enabling loan delivery that has led to a high level of customer satisfaction. Our Business Continuity Plan has worked well, and Conterra Ag is in a ‘business as usual’ mode.
Contact our credit team to learn more about Conterra Ag farm real estate lending options at www.ConterraAg.com.