Before searching for a farm loan do your homework. An unplanned application can mean a rejection of finance or unmanageable loan repayment schedule. This could end up in tears and result in the sale of your farm.
Assessing your loan repayments against farm profit.
“Generally, farmers’ confidence in the agriculture sector drives the demand for debt to fund land and capital acquisitions,” a banker said recently. The average farm profit was also reported as $29,000.
These two items suggest caution when borrowing. It is vital for farmers to find out exactly what they will have to pay in loan repayments – how many dollars a year.
There can also be a big difference between the farm income or turnover and the bit left after expenses which is the profit from which loan repayments must be made.
The problem is that a loan can quickly turn into a debt trap with a couple of bad years. My first reaction, when confronted with borrowing, has always been to see if I can achieve the same result without borrowing.
Options to seeking good farm finance.
Over the years I have been able to show farmers a variety of alternatives, from savings to trade-offs.
There are many ways to acquire assets, particularly in farming, without getting the bank involved. The “FarmloanSeeker” or “FLS” app that finds out what is available through a targeted enquiry to a range of banks. It is an easy way to check out what is available and get the very best and cheapest loan possible.
These two items suggest caution when borrowing. It is vital for farmers to find out exactly what they will have to pay in loan repayments – how many dollars a year.
There can also be a big difference between the farm income or turnover and the bit left after expenses which is the profit from which loan repayments must be made.
The problem is that a loan can quickly turn into a debt trap with a couple of bad years. My first reaction, when confronted with borrowing, has always been to see if I can achieve the same result without borrowing.