This time of year, ag lending may not be at the top of the priority list. With a lot of summer moisture and a late planting season, all hands are on deck to get the crop in. American Bank & Trust understands that. We also understand that fall is a great time to think about ag loans for new equipment, livestock, machinery, seed or operations.
Why take out an ag loan now?
There are several reasons. First, many farmers and ranchers seek ag lending this time of year for harvest equipment or upgrading older equipment. “We are seeing very strong yields in some areas, coupled with challenging ground conditions. If your current equipment isn’t up to the task of big yields and wet fields, a strategic upgrade could put you dollars ahead at the end of the year,” says Bryan Van Scharrel, VP, Ag Business Banker at American Bank & Trust in Huron. SD continues to have some nation-leading yield increases, so the infrastructure to handle the bushels needs to grow with them.
Second, during the harvest rush, there can be good opportunities to purchase livestock. Sometimes, the last thing anyone wants to deal with when they are busy is getting a new group of freshly weaned calves going, or buying more bred heifers. For a producer that has the time and expertise to take on this challenge, this can be a good window of opportunity!
Third, input suppliers have tailored their retail programs to give the best discounts to the producers that can pay up front. Gone are the days, when you harvested a crop, sold it, and then started buying inputs for the next year. Instead, we are capturing opportunities by storing grain and buying inputs early. The savings from buying seed, fertilizer, and chemical can more than offset the cost of interest on the money to purchase them early.
Finally, there are a lot of fall land sales. Land is the largest asset in most operations and receives a huge amount of publicity because of it. Long-term, land is generally a sound investment. Even in these times of economic uncertainty, if the right opportunity presents itself, it could be a good time to invest in some land. While the Federal Reserve is indicating continued interest rate hikes in the future, loan rates remain historically low.
Relationship lending and financial planning
“We really focus on relationship lending,” says Van Scharrel. Each year during the offseason, (if there is such a thing on the farm!) American Bank & Trust assists all of their customers in completing a comprehensive financial review. “This process involves updating their balance sheet with current inventory, performing a multiyear balance sheet and income statement comparisons, and cash flow planning. It really gives producers a strong understanding of the changes in their operation over the previous year and a solid operating plan for the year to come, “adds Van Scharrel. This gives customers an accurate assessment of their financials.
American Bank & Trust is rooted in smaller communities. So we understand ag.
We have competitively low-interest rates available to agri-businesses. We offer flexible terms that fit your timeline. Our decisions are made locally too. This makes for prompt decisions in a business where timing is everything.
To learn more about how and what you can do, contact an American Bank & Trust ag lender today.