The days of single source-operating lines from your local banker have almost become obsolete. Even though community banks continue to dominate U.S. agricultural lending - issuing 77% of all Ag Loans - they are facing extreme challenges that negatively impact them, their Ag customers and the economies of the communities they serve.
The number of community banks has dropped dramatically over the past 20 years, as it becomes increasingly difficult for them to compete because of capital reserve requirements, aversion to risk, regulatory costs and the inability to compete with larger, better-capitalized banks. And, even though large banks are providing approximately 15% of all agricultural loans, their originations are down by close to 10% despite the demand remaining strong and the number of community banks shrinking.
Where does that leave the farmers and ranchers?
Progressive farmers, ranchers and their vendors realize that some combination of financing is needed to meet their capital and operational requirements. Even with senior operating lines of credit, specials run by equipment dealers, and government rebates factored in – agricultural operators often find themselves short of their goals. Many of these businesses are bridging the gaps with supplemental financing from non-bank alternative lenders like Strategic Ag, a division of small business lender, Strategic Funding.
How do you know if this type of financing is right for you? When deciding to borrow from these lenders the primary questions you should be asking yourself are:
Availability – In conjunction with all of your primary financing, can you get the supplemental funds you need to satisfy your whole requirement?
Timing - Does the timing of the financing you currently receive coincide with your capital requirements?
Amount – Is the amount of financing you are being offered from all of your sources combined sufficient enough to accommodate your goals?
If your answer is “no” to one or more of these questions, then obtaining financing from an alternative lender may be a viable option for your operations. These lenders, working alongside your bank, can fill the holes and bring quick access to capital to farmers and ranchers as opportunities or challenges present themselves. While non-bank alternative lenders typically cost more than secured bank lines, obtaining the financing is quick, simple and relatively easy. It may cost more, but it is available with funding in days, not weeks.
The use of technology driven underwriting coupled with human insight from finance professionals that know the Ag business has allowed Strategic Ag to provide millions of dollars to row crop farmers, vegetable and fruit growers, feed lots and Ag service providers. This methodology enables Strategic Ag to fund up to $100,000 in four to seven business days. Amounts over $100,000 and up to $2.0 million, can take as few as ten to fourteen business days to deposit in your bank. In fact, this fast access to capital recently enabled one row crop provider to obtain $500,000.00 to take advantage of a 20% discount for his nitrogen inputs, by pre-paying the order.
To see if alternative financing is right for you, set up a time to speak with Strategic Funding’s agricultural finance team, Strategic Ag.
About Strategic Ag:
Strategic Ag – the agricultural finance team of Strategic Funding, has offices in Rockwall, Texas and New York with members who have owned and operated farms and ranches (We have walked in your shoes!) A direct lender, Strategic Funding has provided over $1 Billion to small businesses across the United States and Australia. To learn more visit www.sfscapital.com