Ag Equity

Ag Equity Loans Give Producers Flexibility, Savings

Many producers have farmland that is owned free and clear, or has only a small amount of mortgage debt associated with the property. Because of that, AGRIfinancial developed an Ag Equity line of credit that offers flexibility at very low rates. It is a convenient way to borrow for operating and other farm and business expenses at a cost below NY prime rate. Consider that when many lenders peg their operating rates to Prime + 1% or even higher margins.

If you are working with a client who has that strength, let them know about this program. Here are the features and benefits in a quick overview:

Features Benefits

Revolving Line of Credit

Allows you to draw funds at any time, and pay back without any fee, penalties.

Draw periods of 5 or 10 years

Provides flexibility, no requirement to refinance each year, or revolve funds on annual basis as some require.

Variable rate based on Libor-indexed funds

Offers the most competitive short term rate in the market.

Terms up to 30 years.

Your selection. Gives you a lot of flexibility to have a stand by line of credit. No annual fees.

For many uses.

Can meet both farm and business related needs.

Conversion feature.

If you have a balance outstanding at the end of draw period, you can select a fixed or adjustable rate to manage that debt.

Customers Who Qualify For The Ag Equity Loan Will Generally:

  • Have debt/asset ratios of under 50%.
  • Have a credit score at 680 or above.
  • Have strong ratios on debt coverage (1:35 to 1), and other financial characteristics.

Questions You May Get About The Ag Equity Program

Can this line of credit be used for any purpose?

Loan proceeds may be used for agricultural purposes or for business use. That may include operating needs like feed, seed, fertilizer, repairs, or even equipment purchases. Business uses could include payroll for a related business, office equipment, or other business expenses.

Is there a fee for every draw that is made?

There are no fees associated with any draw on your line. Draws must occur within the 5-year or 10-year draw period. And if a customer desires funds to be wire-transferred to their bank, the bank may charge a fee for the incoming wire.

Is there a limit on the size of a draw?

The minimum amount per draw is limited to not less than $2,500. This loan is not intended to provide funds for small transactions.

How do customers request a draw?

They would contact AGRIfinancial Services at 877-548-2622 (before 12 noon EST) and funds are wired the next business day. In the near future, customers will also have the ability to draw funds using electronic banking services associated with their AGRIfinancial account.

How do they make payments?

The customer has the option to make principal and interest payments at any time without penalty. The line will be set up so that semi-annual, interest only payments are due on January 1 and July 1 each year during the draw periods.

At the end of the draw period, if I have an outstanding balance, how is that handled?

Both ag equity options (5 or 10-year draw) have the option to renew for an additional 5 years (subject to credit review). Customers can choose to either qualify for and establish a new draw period, or they could convert the outstanding debt to either a fixed rate or adjustable rate product that will have an amortized payment schedule.

If I have some debt on my land, can I still obtain an Ag Equity loan?

The process would involve refinancing the existing mortgage debt into the new Ag Equity loan which will have a 1st lien position on your property. Total debt on the property cannot be above 50% of the value.