Help Your Clients Understand What Ag Lenders Offer

Your farm & ranch clients may have financing questions as they look to invest in their property. You can help by sharing general information about agricultural lenders.?

Agricultural lenders offer local loan origination, a personalized business relationship with borrowers, and payment flexibility, says Phil Peabody , Executive Vice President and Chief Lending Officer with Capital Farm Credit.?

Keeping it local

Ag lenders differ from other institutions because they originate almost all of their loans themselves, Peabody explains. Your clients’ debt is unlikely to be sold off on the secondary market like a mortgage.?

Investing in the relationship

In part because their own money is invested, agricultural lenders want to get to know borrowers and their circumstances. Ag lenders offer responsive loan service, according to Peabody.?

They likely know about issues unique to rural land, such as easements, mineral leases, and land access, he continues. These topics can affect legal and title issues as well as property values. “If a lender isn’t comfortable with those things, I’m not sure the lender will be as helpful to a farm & ranch borrower,” Peabody says. “On a day-to-day basis, working with an agricultural lender may be more productive.”

Agricultural loan professionals often specialize in particular land uses, such as cattle ranching or dairy farming. So they understand the nuances of their clients’ business, Peabody says.?

“Agriculture doesn’t pay every month,” he says. “You may only sell livestock a couple of times a year. In that case, we work with the customer on a semi-annual basis. Payments can be set up monthly, quarterly, or annually.”

Staying flexible

Agricultural lenders may be more flexible when considering new investment projects. “An agricultural lender may be more apt to work with a landowner if the landowner wants to build a barn or a house or buy new equipment,” he says. “Perhaps irrigation improvements are needed or the landowner wants to harvest timber. The landowner has that relationship with the lender, and the lender can work with the client about restructuring the loan or rearranging payments.”?

Peabody encourages landowners to look at their available financing options, which include banks, insurance companies, and Farm Credit institutions—cooperatives focused on farm & ranch borrowers and communities.

When considering which lender to choose, your clients should look for a local presence and an understanding of their industry, Peabody recommends. “Rural land has a lot of nuances,” he says. “Land ownership can be sometimes unpredictable.”