Farm Lenders Offer Management Assistance
by Lando Lend
in Business (submitted 2008-07-04)
Farm management assistance and related forms of credit counseling are often available through farm and its lenders official agricultural loans. Three types of institutions-commercial banks, the Farm Credit System of borrower-owned banks and associations, and USDA Farmers Home Administration (FmHA)-are the main lenders to farmers throughout the country. These lenders provide capital and other resources to help farmers americas acquire land, plant, machinery and supplies.
Farm lenders have a strong interest in the management of farms, as they rely on income generated from farm to pay their loans. To ensure the high quality of loans, lenders must have reliable information about their clients farmers, and they must be able to assess the strengths and weaknesses of agricultural enterprises. Farm management is closely related to the decisions of credit that lenders must make every day.
Farm lenders generally have loan officers who are trained and experienced in farm financial management, and many are experts in the field. Farm loan officers often help farmers customers in the analysis of records of exploitation, development and interpretation of financial statements, and assess the impact of proposed changes in the operation.
The different amounts and types of management assistance are available through each lender. Farm families should discuss their particular needs and situations and select the lender that best suits those needs.
The following describes the services offered by the three main groups of institutional farm lenders. Contact your lender to determine appropriate services and assistance that best suits their needs.
Commercial Banks
There are about 14000 commercial banks located throughout the United States that provide a wide range of loans and other financial services to farmers, ranchers, suppliers of agribusiness, rural businesses and residents, and their counterparts nonrural.
Credit Services. These banks play a significant role in agricultural production and operation of real estate lending, and may provide other services such as credit FmHA loan guarantees, consumer and business loans car and truck loans, home and home loan , Student loans, and credit card services. In addition, in late 1989, will be an important source of long-term, fixed interest rate loans through the secondary market of Farm Real Estate Loans, more commonly known as Farmer Mac.
Most of this commercial bank for agricultural credit is provided by the Nation farm banks. Farm banks are defined by the Federal Reserve Board as banks whose agricultural loans as a percentage of total loans, higher than the average unweighted in the proportion of agricultural loans to total loans in all banks. This ratio currently stands at 15.99 percent, and there are 4441 farm banks.
Commercial banks remain the largest suppliers of agricultural production (nonreal estate) loans. In late 1987, banks held about 44 percent of this market, compared with 38 percent in 1980. These production loans are designed to meet the exact requirements of credit for individual farmers. They can charge fixed or variable interest rates may vary within 1 day to 10 years. These loans may be set up as a single advance loan, where all funds borrowed at once at the beginning of the loan, or can be structured to provide funds to multiple advances.
Commercial banks can also provide farmers with fixed or variable rate real estate loans for the purchase or refinancing of the holding of real estate.
Services lease. Because it is not always prudent for a farmer to buy all the assets necessary, some banks are now servicing these customers through leasing programs. These programs allow the leasing of the borrower to control the use of the property, without greatly affecting the holding of stock. These programs can offer leasing some tax benefits that may not be available to farmers who buy property for their use.
Management of the farms. Commercial banks offer trust and agency management of farms for their clients farmers. Often, agency services carried out to farm owners who can not actively manage their estates, or for farmers who need more experience in managing their farms. The trust management of farms are often supplied to farmers who want to create a trust to manage a farm that is passed to heirs who can not actively manage a farm.
Other services provided by banks. Commercial bankers may attend the training provided by the association Bankers americas to help them provide better use of financial analysis to their agricultural customers. Some banks provide this analysis for its holding to borrowers at no cost, and other lenders charge to cover the cost of providing the analysis.
Commercial banks also provide their customers with services operating records, usually for a fee. Another service of some banks to offer a fee is marketing facilities. With the authorization farmer, the bank can transfer funds through the Federal Reserve System to cover margin calls.
Commercial banks also have the ability of farmers with a wide variety of deposit services, including checking and savings accounts and cash management, accounts and money market accounts, now accounts, certificates of deposit , Electronic fund transfers, checks and certificates. All deposits less than $ 100000 are federally insured by the Federal Deposit Insurance Corporation.
The Banks policies and products vary from one bank to another. To find out what services are available at your local bank, talk to the banks customer service representative.
Farm Credit System
The Farm Credit System is a nationwide network of borrower-owned banks and associations offering financial services and credit to farmers, ranchers and their cooperatives. Other eligible to borrow Agricultural Credit buyers are rural housing, commercial fishermen, aquatic producers, operators of wood, rural utility systems, and other businesses related to agriculture. The Farm Credit System is the largest provider of credit for U.S. agriculture, with offices in all states and Puerto Rico.
Credit for Agricultural Producers, buyers of rural housing, and farm-related businesses. Production credit associations (PCA) to make short and medium term loans with maturities of up to 10 years for a variety of purposes, including operating expenses, equipment purchases and capital improvements. Federal Land Bank Partners (FLBA) make long-term loans, usually with a maturity greater than 10 years for the exploitation of real estate and mortgage loans country cottage. FLBA to make loans as agents for the district banks Credit Agricole. Agricultural credit associations (ACA) performing loans of all kinds. The ACA is the result of a PCA and a FLBA merger into a single association.
In many parts of the country, the PCA and the FLBA operate under joint management and, therefore, are able to offer borrowers a short, intermediate and long-term loans. System associations are sometimes known by its trade name-Farm Credit Services or Credit Agricole.
Agricultural Credit gives borrowers a variety of loan products, including the level of variable rate loans and a number of fixed and adjustable rate loans. Special loan programs for small loans also are available in most areas, these minimize paperwork and speed up the processing of loans typically less than $ 50000.
Products vary from one district to another to reflect regional differences in the market. Each loan is designed to meet the specific needs of each borrower. Each office Agricultural Credit fixed their loan rates based on three main factors: (1) local competition, (2) the costs associated with securing funds for loans and loan service, and (3) risks associated with the loan. No matter what kind of financing, interest is paid only by the amount used, and only for as long as it is used.
Credit Cooperative Agricultural and Rural Utility Systems. There are three banks of cooperatives in the Farm Credit System-CoBank, National Cooperative Bank, headquartered in Denver, Colorado; Springfield Cooperative Bank in Massachusetts, and St.. Paul Bank of Cooperatives in Minnesota
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