Financial Resources Available to Poultry Producers 2015 MN TURKEY GROWER S ANNUAL CONFERENCE PAULINE VAN NURDEN AG BUSINESS MANAGEMENT EDUCATOR 1
COLLABORATION IS KEY Work with your team to develop a plan to move forward financially Can current loan terms be amended? What are other immediate financial needs? What capital improvements or long term adjustments are needed? Communication is key! 2
COLLABORATION IS KEY Borrowing additional funds may not be the best option for your operation. More debt to service with the same or less future income Loan Amendment Options Interest Only Payments Loan Payment Modification Refinance / Loan Extension 3
FINANCIAL PLANNING ASSISTANCE Resources available as producers plan for future of operation. Assistance Can Include: Balance Sheet Preparation Cash Flow Projection Capital Investment Planning Long Range Goal Setting 4
FINANCIAL PLANNING ASSISTANCE Resources & Financial Planning Available From: 5
Loan Programs Available for Financial Assistance LOAN PROGRAMS CAN PROVIDE ASSISTANCE WHICH IS BEST FOR YOU? 6
FSA LOAN PROGRAMS FSA Direct Loans Loan is made and serviced by FSA Office Borrower applies directly for the loan Targeted funds for Beginning & Socially Disadvantaged Farmers No Fee, Beyond Normal Loan Fees Funds can run out during the Fiscal Year 7
FSA LOAN PROGRAMS FSA Direct Loans Maximum loan indebtedness: $300,000 Repayment terms: Operating Loans 12 Mos. or Production Cycle Chattel/Intermediate Loans Typically 7 Year Max Real Estate/Long Term Loans Up to 40 Years Typically Low Interest Rates Operating: 2.375% Farm Ownership: 3.5% Collateral for Loan Should be at Least 1:1 8
FSA LOAN PROGRAMS FSA Direct Loan Types: Farm Operating: Can be for annual operating expenses or chattel related purchases. Farm Ownership: Can be used for real estate purchases or improvements. Emergency Loans: Need a Disaster Declaration from the Federal Gov. When Available - Used For Production Loss Costs 9
FSA LOAN PROGRAMS FSA Guaranteed Loans: FSA Guarantees the loan to your regular lender against possible loss, up to 90% Lender applies for loan, with borrower assistance Same Major Loan Types: Guaranteed Operating Loans Guaranteed Farm Ownership Loans 10
FSA LOAN PROGRAMS FSA Guaranteed Loans: Maximum Guarantee: $1,392,000 Amount Adjusted Annually for Inflation Guarantee Fee to FSA: 1.5% of Loan Guarantee Amount Collateral Per Bank Parameters Loan Repayment & Interest Rate: Determined by Lender, Approved by FSA 11
SBA LOAN PROGRAMS: SBA 7a Loans: Qualifications: Profitable, Small Business - Net Worth - less than $15 million Average Net Income (After Tax) - less than $5 million Loan funds for a sound business purpose Working Capital Purchase equipment and supplies Construct or improve buildings Refinance existing business debt 12
SBA LOAN PROGRAMS: SBA 7a Loans: Amortization: Working Capital Loans 7 year maximum Equipment Loans 10 year maximum Real Estate Loans 25 year maximum Repayment: Typically, monthly principal & interest Can be interest only initially 13
SBA LOAN PROGRAMS: SBA 7a Loans: Collateral: Loan fully secured by business & personal assets Loan can not be denied for security purposes only Maximum Loan Amount: $5 Million Maximum Guarantee Amount: Up to 85% 14
SBA LOAN PROGRAMS: SBA 7a Loans: Guarantee Fee: Sliding Scale Loans under $150,000 No Fee Loans over $150,000 Up to 3.5% or More Interest Rate: Determined by Lender, Approved by SBA Maximum Allowable Rate is 2.75% Over a Nation Base Rate (Typically Wall Street Journal Prime) 15
FARMER MAC LOAN PROGRAMS: Farmer Mac I Program: Lender works with Farmer Mac to obtain loan approval loan is sold to Farmer Mac Basically the Secondary Market for Ag Loans A means for banks to offer long term, fixed rates Eligible Loan Types: Real estate loans Properties must be farm related & produce USDA recognized commodities 16
FARMER MAC LOAN PROGRAMS: Farmer Mac I Program: Amortization & Repayment: Up to 30 Year Loan Variable Payments Allowed - Monthly, Annually, etc. Loan to Value Requirements: 65% Maximum of Appraised Value for Facility Loans 60% Maximum of Appraised Value for Farmland Maximum Loan Amount: $12 Million 17
FARMER MAC LOAN PROGRAMS: Farmer Mac I Program: Eligible Loans: Borrower Debt to Asset Ratio: 50% or Less Current Ratio Over 1.25 Term Debt Coverage Ratio Over 1.25 Credit Score > 680 Tax Returns used as the basis of loan approval 18
FARMER MAC LOAN PROGRAMS: Farmer Mac II Program: FSA Guaranteed Loans are sold to FM II FM II buys the Guaranteed Loan portion only Local Lender Remains Loan Processor & Retains the Non-Guaranteed Loan Amount No Further Credit Decision Needed Loan Purchase is Automatic 19
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