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Whether you are a farmer with a small piece of agricultural land or whether you have hundreds of acres of farm land, you might need farm real estate loans to satisfy some of the urgent farming requirements. Some of the most common farm real estate loans available include:
Crop Production Loans: This is one of the important farm real estate loans available and is availed of by farmers most often than not. The highlight of this loan is that it focuses on seasonal borrowings for any crop production and this is normally structured on the basis of non-revolving lines of credit that has a maturity date, which will eventually coincide with the planned commodity sales. The margin requirement for this loan is normally 30% and is usually met with either a cash down payment or assignment of government payments, equity in equipment, and any type of collateral.
Livestock loans including cow/calf Loans: Livestock loans have been designed for cattle purchases. These farm real estate loans are normally structured in such a way that farmers will have to make annual payments and the payment dates normally coincide with the expected cow/calf sales dates. The loans offer annual renewable lines of credit as well as the opportunity to cover any type of seasonal borrowing need for the farm or the ranch or for any type of operating expenses on the farm land. The annual lines of credit are governed by the periodic Borrowing Base Certificates. The margin requirement in livestock loan is normally 25% and is usually met with either a cash down payment or by cattle owned by the farmer or any other type of collateral.
Feeder loans: Feeder loans are type of farm real estate loans that are quite flexible. A feeder loan can be structured according to individual requirements for covering specific programs or it can be used as an annual renewable line of credit. The revolving lines of credit in feeder loans are usually governed by periodic Borrowing Base Certificates. The margin loans requirement is that of 25% and it can be easily met either through a cash down payment or through cattle already owned by the farmer or any other type of collateral.
Agri-business Loans: There are different types of farm real estate loans available and one such loan is the agri-business loan. The agri-business loans are usually used for creating working capital, equipment financing, and sometimes even as inventory loans in order to meet a seasonal requirement or even a permanent need.
Grain Facility Loans: This is another type of far real estate loans and focuses mainly on financing merchandising operations and grain storage. This is a type of loan that can easily be structured on the basis of annual renewable lines of credit for the grain ware-housemen. It can also be structured according to individual requirement including specific merchandising needs or specific grain contracts. The margin requirement for this type of loan will vary depending certain aspects like the commodity being hedged, open, optioned, or cash forwarded. Farmers can meet the margin requirements through existing or currently owned commodities, cash margin, equity in commodity hedge accounts, or any other type of collateral.
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Source by Hayi Mansoor
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