Farm finances

[Herefordcross]

Since most of us are somewhat anonymous on here, what do you do when you need farm loans/financing other than 0% or what have ya on equipment/vehicles. We had to borrow money to keep operating a while back and in five years it'll be paid off, Lord willing. I was just curious what route you take when you do need to borrow money, not being nosy just wanting some new ideas. If you never have to borrow money then that's just great but, we had too.

 

[Jogeephus]

I do two things. I keep a signature loan open at the bank. This floats at 1.5 above prime. I use this to fill in the gaps when I know I'm going to be able to repay it shortly. (I used to borrow it from myself - when possible- but I figured out I was loaning money to a deadbeat.)

The second thing I do is take equity out of the farm. This payment is fixed and is much lower than anything else I can get. Since I want to pay the farm off in short order, I don't do this unless it is for a big purchase and very important.

I'm sure their are much better ways to handle your finances than how I do mine but you did ask.

 

[Crowderfarms]

I'd be afraid to borrow a nickel against our places. We wait until we can pay cash, or plainly put, we don't get it. We get offers for lines of credit about 5-6 times a week, but I wont fill out for any of those offers.

 

[hersh]

I know most people shun them but credit cards can be great.I keep a couple with high credit limits and 0% for a year, they are there if I ever needed a loan.But the most important are the ones that give you back 2% or better.I just got one that gives me 3% back on construction supplies.I have a plumbing biz and my supply house said I could use it with them...They give me an automatic 2% for paying by the 10th of each month and this card gives 3% cash back.Its important to make sure it cash back they give and not 'rewards'.My supply bill a month is anywhere between 15-20k so 5% is a lot to me.That is also for fuel,and can be used to buy farm supplies.You need excellent credit for these cards,and if used properly are a great tool to squeeze a couple more cents out of things.

 

[Herefordcross]

I only use one card and that's it. I guess I'm old fashioned when it comes to the credit card game.
I was raised to pay cash for everything but, the way things have been around here the past few years, health issues along with a couple of other things we had no choice or we have had to sell land or cattle. So I did what I had to do. Farm Credit is worthless around here. There's a fairly decent bank here but, they run from agriculture. They've been stuck by so many farmers that I had to sign a non-dischargeability agreement, in other words if I go bankrupt the debt can't be included/released in the bankruptcy. Having gotten screwed a few times I knew what they were talking about. A dairy guy got me for 40 acres of corn, chopped 20 and combined 20 and then a week after he shelled the last of it the FSA came in and picked up his cows and he went bankrupt. They wouldn't even let me take my corn off of the place he had rented, the FSA hired a local trucking company to come in and haul the corn silage out of there and they sold it to another dairy guy whom they had by the kahunas as they do most anybody that messes with 'em around here. Their Loan to value is something like 150%!

 

[Jogeephus]

I'd be afraid to borrow a nickel against our places. We wait until we can pay cash, or plainly put, we don't get it. We get offers for lines of credit about 5-6 times a week, but I wont fill out for any of those offers.

I agree with Crowder, but if you have to - you can normally take some equity from a long term note much cheaper than you can a short term. ie an ag service here will sell you fertilizer on credit. Its easy and convenient. Its also at 18%. I don't like to borrow money but sometimes you have to - or at least I do.

 

[hersh]

I only use one card and that's it. I guess I'm old fashioned when it comes to the credit card game.

I understand that but you have to admit its not an old fashioned world anymore,it takes every advantage to get by.And I hate the bad stuff thats happened to you.

 

[hersh]

double post...sorry

 

[Herefordcross]

What's left of the "co-op 's " around here are good but, I don't like carrying a bill with them, I would rather owe one place and not a half dozen but, there are times when it's feasible to use in house accounts. I am glad that there are people who don't have to borrow to keep things going but, I would bet what little I have that 90% of all farmers borrow money at some point throughout the year.

 

[dun]

I use a credit card for almost everything and pay it off monthly. Have an open account with the feed mill that I pay off the first of the month. Just makes it easier to keep track of stuff.
Cattle and equipment I pay cash

dun

 

[backhoeboogie]

For mickey mouse loans, I borrow it from myself. That probably sounds stupid but the farm is a different business.

For my corporation, I buy the equipment and lease it to my company. It is a CPA thing.

My CPA got own to me about putting my own nickels into the corp. So I have been trying to think about my company as a third party. Trying to think of the farm the same way.

My regular job pays my salary so I don't have to make money farming or with my corporation, but I do.

 

[somn]

A young man here in the area has went with Rabobank. He said they are very accomodating with fair rates. I'm not sure how large of a company they are he made it sound as if they had many branches in many states. That was for an operating line of credit.

 

[Howdyjabo]

Best thing we have done is to get an opperating Line of Credit.
Our money comes in in big chunks-- but I have $1000's tied up before I get paid. so it helps with cash flow.
Its saves lots of money by letting me pay for things to get cash discounts and avoid "late" fees .

Also if I find a good buy on something I need(ie mower,tractor four wheelers or feed bunks ect.) I can just write a check- then figure out how to finance it- if I have to.

We have ALWAYS had to borrow money-- we started with 40 acres and a truck -- It takes moeny to make money so its just a fact of life.
Though I do keep a real tight hand on my debt ratio-- I don't like being in over my head.

 

[easy]

We have on open line of credit at our local bank. Great guys to deal with.

Never heard of Rabobank? They tried to buy Farm Credit and almost got it done. I bet they try again. They are Dutch and it's not if they are coming but when.

 

[Herefordcross]

Never heard of Rabobank! Farm Credit are seperate all over the country so they'll have to do some movin' around to buy all of farm credit.

 

[sidney411]

We deal with a credit union that my husbands family has been dealing with for 3 generations on both sides now. I'll admit we have loans for some cattle, tractor, hay equipment, and other misc non-farm loans with them. I really like that on the farm loans we have 1 annual payment instead of monthly.