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Mudfly

Farm credit / lending institutions?

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Looking for some advice for a friend.

They are looking to purchase a half section of pasture/grazing land in Colorado. They don’t have a farming background so they asked me.  I don’t have many details, but sounds like they would have a tenant willing to lease it from them, so there would be some income off it.

They asked me about loan options so I thought that a farm credit bureau or something similar might be a good option.

Any suggestions or positive experiences that you can share?

I thought going through a local credit union or bank might be the best, but figured I’d check on other options.

thanks in advance.

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We used to be with Farm Credit along with a lot of other guys in the area. I don't think any of them are going to give a good word of recommendation to use Farm Credit anymore. Everyone went to smaller Town Banks or some other agricultural lenders in the area

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3 hours ago, bitty said:

We used to be with Farm Credit along with a lot of other guys in the area. I don't think any of them are going to give a good word of recommendation to use Farm Credit anymore. Everyone went to smaller Town Banks or some other agricultural lenders in the area

If your small town banks will even touch a loan on farming or farm ground. Around here no small bank will touch any type of farm loan with a 20 ft pole. The larger ones wont either. Unfortunately Greenstone which is in the FCS system is your only option around here. We found that out when my brother bought land in 2014. Greenstone was the only one who would even look at a farm loan around here. Buy equipment usually the dealer has some options. Local banks again won't touch anything farm related.

It probably varies from area to area. In my area, farming is the ugly, red headed stepchild no one wants to talk about.

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Local banks will do farm loans here but are not always farm friendly. They tend to bail when the age economy goes south.

I am very happy with farm credit here.

Thx-Ace 

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Several excellent small local and regional banks in our area.  I would think they could get a loan by going that direction if the have down money and enough income to pay for the place.  

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I highly recommend small town banks. Shop around. 

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When I bought my place I had no choice but Farm Credit. The local lenders said no way.  I really had few complaints and the dividend check I got every year was equivalent to a monthly payment. All paid off now for several years.

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3 hours ago, bitty said:

We used to be with Farm Credit along with a lot of other guys in the area. I don't think any of them are going to give a good word of recommendation to use Farm Credit anymore. Everyone went to smaller Town Banks or some other agricultural lenders in the area

+1..............Leaders of FC here are morons.  

 

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8 hours ago, bitty said:

We used to be with Farm Credit along with a lot of other guys in the area. I don't think any of them are going to give a good word of recommendation to use Farm Credit anymore. Everyone went to smaller Town Banks or some other agricultural lenders in the area

 

4 hours ago, TomH said:

When I bought my place I had no choice but Farm Credit. The local lenders said no way.  I really had few complaints and the dividend check I got every year was equivalent to a monthly payment. All paid off now for several years.

 

4 hours ago, TP from Central PA said:

+1..............Leaders of FC here are morons.  

 

Definitely not the best lender. But the only game around for land morgages. They did work with me last year when i was off sick. But if the crappy death and disability they sell paid off it wouldn't have been an issue. The dividend is nice. Customer service is spotty (it has gotten better). But when I can get an  unsecured loan for equipment at the Credit Union with lower interest than Farm Credit that's pretty bad. And Farm Credit wants to collateralize all your equipment not just the stuff you're buying! I'm beginning to think it's a jobs program for Penn Staters.

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20 minutes ago, exSW said:

 

 

Definitely not the best lender. But the only game around for land morgages. They did work with me last year when i was off sick. But if the crappy death and disability they sell paid off it wouldn't have been an issue. The dividend is nice. Customer service is spotty (it has gotten better). But when I can get an  unsecured loan for equipment at the Credit Union with lower interest than Farm Credit that's pretty bad. And Farm Credit wants to collateralize all your equipment not just the stuff you're buying! I'm beginning to think it's a jobs program for Penn Staters.

We've been getting unsecured revolving operating loans for years at FCS. In fact, that was the reason why switched because our local bank wasn't going to do it.  Every time we wanted to take money out of the operating loan it was almost an interrogation on what you were going to use it for.  FCS isn't perfect but they have been a better option then anything else around here.  I know our same said local bank is starting to get real careful on who and what they lend out to in these times.  

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i went with our small town bank two years ago on our land loan, its a bit old school BUT was a better option for us than FC at the time. 

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Only lender ever worth a pitcher of spit was the coffee can buried in the yard. No one else will even look at anything Ag anymore.

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I went with Farm Credit years ago, they treated me very good. It was almost scary how easy it was to "get more money". Locally seems like they have tightened their belts somewhat and small banks are stepping in. However I would say Farm Credit would / should have a pretty good finger on the pulse of Ag lending. Locally they have done a lot of case studies on dairy and poultry, when they say you have to do this to make it cash flow I would have to believe them. 

I am afraid that this whole down turn is going to get some in trouble, matter of fact it already has.

Running an independent repair shop brings up the question, how far can I extend credit? Have been really lucky so far but never know whats around the next turn. 

 

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4 minutes ago, CIHTECH said:

I went with Farm Credit years ago, they treated me very good. It was almost scary how easy it was to "get more money". Locally seems like they have tightened their belts somewhat and small banks are stepping in. However I would say Farm Credit would / should have a pretty good finger on the pulse of Ag lending. Locally they have done a lot of case studies on dairy and poultry, when they say you have to do this to make it cash flow I would have to believe them. 

I am afraid that this whole down turn is going to get some in trouble, matter of fact it already has.

Running an independent repair shop brings up the question, how far can I extend credit? Have been really lucky so far but never know whats around the next turn. 

 

We still use a service from farm credit to business plan , they have a good program for that.

I agree with the worrying about extending credit part to your business customers. Years ago we had asked our accountant about doing some custom work he said it pays real well and pencils out awesome. That is until you don't get paid. He said  most custom operators that he ever saw in the area only lasted around five years because they'd get someone that wouldn't pay and then I took the profit completely away

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I tried farm credit once seemed like a lot of hoops to jump through compared to small town bank but they’re rates are usually lower around here.

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I learned back in the 80’s, if the banks wanted to loan me more money, quit borrowing. If they won’t lend you money, beg borrow or steal what you can. 
I was barely 18 when my dad broke his back. I signed a $150,000 operating note and the banker told me that wasn’t nearly enough. At 17% interest rate it was too much. I had bleeding ulcers by the time I was 19. 

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3 hours ago, CIHTECH said:

Running an independent repair shop brings up the question, how far can I extend credit? Have been really lucky so far but never know whats around the next turn. 

 

You must have pretty decent group of people in the area if you haven't had issues.................My full time ag based customer base wasn't extremely large(Not many full time operations left here, most guys here now work a job and play at night), but it was always a fight getting money out of the full time guys for some reason.  Guys who made livings elsewhere didn't give me any grief, nor did the small out door power equipment crowd.  Luckly I did get everything chased down and paid up before I closed up.  I enjoyed the work, but don't miss the desk end at all.  

I have to say, our local banks we deal with are really good.  Bought acouple properties, vehicles, equipment and never had any issues and they got right on it.  Called FC about the one piece of ground while trying to buy it, they didn't seem interested in helping at all, so it was back to the locals who got right on it.  Its a running joke around me that if you call FC and tell them your last name is one of a half of a dozen, they will then get right on it for you.

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I worked for Farm Credit in the mid 1980's till the mid 90's. Tough times; put a lot of guys out but they had no equity left or working capital. FC is still alive and well here in the Delta area with most of the associations paying a good patronage refund at year end. Most small banks are trying to diversity out of ag unless the directors are mostly famers. And those are selective with who they lend to. The balance are left to the swamp of retail dealers  who are pretty usurious in their policies.

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Around here most of the farm credit lenders only last 5 to 10 years and then they get taken by one of the other local banks that are involved heavily in ag 

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7 minutes ago, bitty said:

Around here most of the farm credit lenders only last 5 to 10 years and then they get taken by one of the other local banks that are involved heavily in ag 

The bank we do business with has been in business for 110 years.  Independent with one location and run by the same family since 1916.

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Interesting question. Just went through some shenanigans with the local bank. I'll include my rates because I dont mind.   First thing to note you said they never farmed previously...  that helps on paper. No schedule F on taxes cuz that's a deal breaker for any fanny may Freddie mac loan. 

 Local bank gives me original loan on my house and 40 acres to young 28 y/o but wont give me a fixed rate of 6%   3 years later I started shopping around because i wanted a fixed rate and rates were better. Struck out everywhere as soon as you mentioned the farm word. Local bank kept it in house instead of selling it but they (everyone of the 5 banks in my town) does this on an ARM ADJUSTABLE rate.  FFWD to 5 years ago Farm credit was the ONLY place to take my loan over with a fixed rate of 4.8% (and it was not very competitive)  so I jumped. Well I've been hearing of lots of 3% rates left and right of guys I work with so I called local bank and talked to local guy I've dealt with for years. Oh yah he says we can do it. Well a bunch of time and a big long stupid story later were back to sorry no fixed rate. Fmay and Fmac say NO FARMS, period. Strike 2 is schedule F on taxes. So I'm back to sticking with farm credit. 

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Hopefully they have substantial cash to put down or they won't get to far.  I have used FC for 20 years on multiple land/business purchases, Been easy to work with. Currently shopping for lower rates with FC and local bank. FC is paying 1.20 or 1.25% dividend on loan amount so need to back that out on their quote to compare apples to apples against local bank.

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3 hours ago, Missouri Mule said:

Interesting question. Just went through some shenanigans with the local bank. I'll include my rates because I dont mind.   First thing to note you said they never farmed previously...  that helps on paper. No schedule F on taxes cuz that's a deal breaker for any fanny may Freddie mac loan. 

 Local bank gives me original loan on my house and 40 acres to young 28 y/o but wont give me a fixed rate of 6%   3 years later I started shopping around because i wanted a fixed rate and rates were better. Struck out everywhere as soon as you mentioned the farm word. Local bank kept it in house instead of selling it but they (everyone of the 5 banks in my town) does this on an ARM ADJUSTABLE rate.  FFWD to 5 years ago Farm credit was the ONLY place to take my loan over with a fixed rate of 4.8% (and it was not very competitive)  so I jumped. Well I've been hearing of lots of 3% rates left and right of guys I work with so I called local bank and talked to local guy I've dealt with for years. Oh yah he says we can do it. Well a bunch of time and a big long stupid story later were back to sorry no fixed rate. Fmay and Fmac say NO FARMS, period. Strike 2 is schedule F on taxes. So I'm back to sticking with farm credit. 

4.8% - 1.2% dividend  = 3.6% rate I would still call  FC and check it out

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1 minute ago, 806 man said:

4.8% - 1.2% dividend  = 3.6% rate I would still call  FC and check it out

Currently looking at a local bank.  5% fixed for 20 years with 30% down.  Which I thought was decent. He’s shopping around though.

he was originally thinking contract for deed until I started asking about current owners situation, health and family.  That ended the contract for deed talk quickly.

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