Loan Qualifications
There are two arenas of qualifications
for all loans; the first is qualifying the collateral property, the
second is qualifying the applicant.
We ONLY take Agriculture Real Estate (and affixed improvements) for collateral.
While we understand other assets such as equipment, livestock, and/or crops are valid assets, we do NOT file a “blanket” lien on those assets for additional collateral. We will file a lien on irrigation equipment, wells, and water delivery systems that are necessary for irrigation (if applicable). Be aware that many traditional lenders who may provide long term mortgage loans do as a matter of standard practice file a blanket UCC lien on “all equipment and livestock now owned or hereafter acquired”. This obviously restricts your future operations without their “permission”. If your farm or ranch has a residence located on the property, that's ok, but if your residence is in town and the farm is a separate tract, then only the farm is considered for collateral.
The collateral property needs to be a viable commercial enterprise, with sustainable and historically proven commodity production. We don't care what legal commodity is produced, it can be as simple as hay or livestock - but production is required. This is normally proven by the revenue indicated on tax returns (schedule C, F, or E).
Collateral property must appraise as agricultural. (Highest and Best Use). If the property is where it is or will be imminently utilized for development, then it's not agricultural property and does not qualify for our programs.
Collateral must consist of no less than 10 contiguous acres. The collateral acreage must be utilized to produce gross annual receipts of no less than $5,000.
We are commercial lenders providing mortgage loans for commercial AG land.
We lend to qualified applicants who have demonstrated good management skills; we are not in the business to lend to applicants who pose greater than average risk.
For additional detailed information on how agricultural credit is underwritten and how to maintain good standing with agriculture lenders, see our credit analysis page.
Collateral property qualification:
We ONLY take Agriculture Real Estate (and affixed improvements) for collateral.
While we understand other assets such as equipment, livestock, and/or crops are valid assets, we do NOT file a “blanket” lien on those assets for additional collateral. We will file a lien on irrigation equipment, wells, and water delivery systems that are necessary for irrigation (if applicable). Be aware that many traditional lenders who may provide long term mortgage loans do as a matter of standard practice file a blanket UCC lien on “all equipment and livestock now owned or hereafter acquired”. This obviously restricts your future operations without their “permission”. If your farm or ranch has a residence located on the property, that's ok, but if your residence is in town and the farm is a separate tract, then only the farm is considered for collateral.
The collateral property needs to be a viable commercial enterprise, with sustainable and historically proven commodity production. We don't care what legal commodity is produced, it can be as simple as hay or livestock - but production is required. This is normally proven by the revenue indicated on tax returns (schedule C, F, or E).
Collateral property must appraise as agricultural. (Highest and Best Use). If the property is where it is or will be imminently utilized for development, then it's not agricultural property and does not qualify for our programs.
Collateral must consist of no less than 10 contiguous acres. The collateral acreage must be utilized to produce gross annual receipts of no less than $5,000.
We are commercial lenders providing mortgage loans for commercial AG land.
Applicant qualifications:
We lend to qualified applicants who have demonstrated good management skills; we are not in the business to lend to applicants who pose greater than average risk.
Secondary Market Agriculture Mortgage qualifications:
- Loan Size - < 2,000 acres = $50,000,000 maximum, > 2,000 acres $13,000,000.
- Loan to Value (LTV) - Maximum is 65%; there are rare exceptions to this if the applicant has significant offsetting strengths.
- Debt to Asset - Maximum is 50%, in simple terms at the close of your loan - your net worth must exceed the total of all debts. Exception is integrated poultry where the maximum Debt to Asset ratio at close is 65% (see below).
- Consumer Credit Score - A minimum score of 690 is desired. If you have recent bankruptcy, outstanding judgments, tax liens, or other significant adverse public records, then you will not qualify.
- Debt Payment Coverage - we expect that the history of static operations will indicate sufficient cash flow to cover all payments with a reasonable margin of safety. For expanding operations, the net additional cash flow will be based on the history of:
- your existing operation, and
- the history of the property you are buying. For new operations, projections will be supported by third party information, such as operational budgets from the state extension office.
- Use of Funds - any use that is not directly connected to the AG real estate is considered "cash out"; we do allow cash out but in certain cases may impose restrictions.
Poultry Facility Mortgage loan qualifications:
- Minimum loan size is $1,000,000 - Maximum loan size is $50,000,000.
- We require a First Lien position, but we do allow subordinate liens.
- Maximum loan term for new facilities is 15 years (fully amortized), no balloon payments or calls on the note. Exceptions to the 15 year term limit may be made when the depreciable assets comprise less than 50% of the initial value of the collateral.
- Maximum Loan to Value (for our lien) is 75% on newly constructed facilities (in service one year or less). The total of all liens (including subordinate liens) can not exceed 90%.
- Total Debt Service coverage must be 130% or greater after closing of all loans related to the construction and/or purchase.
- Consumer Credit Score -- a minimum score of 690. If you have recent bankruptcy, outstanding judgments, tax liens, or other significant adverse public records, then you will not qualify.
- Pro Forma Debt to Asset ratio must not exceed 65% including all debts at close.
- For facilities more than one year old, the maximum LTV is 65% and the maximum amortization is 10 years.
- Borrower must demonstrate positive historical credit management with a supporting consumer credit report.
- Borrower must have an approved and valid contract with a major integrator.
- An assignment of the production contract from the integrator is required.
- Adequate insurance coverage on collateral property.
- The Integrator must have sufficient financial strength to ensure the ability to perform on the contract/agreement.
- Construction financing is not available, but with our approved long-term financing obtaining construction locally should not be an issue.
- Breeder facilities, due to the nature of breeder facility farms we will only finance 55% of the value, and cash flow coverage calculations must include full time outside labor expense.
For additional detailed information on how agricultural credit is underwritten and how to maintain good standing with agriculture lenders, see our credit analysis page.