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Kelsey Maslen & Cara Harrison
Loan Officers
Frederick and Westminster, MD
Office 301-663-4192
Who is Farm Credit?
Financial Cooperative
Customer-owned and customer-focused agricultural lending
institution
What does Farm Credit Finance?
• Farm purchases
• Operating loans
• Equipment
• Rural home loans
• Crop insurance
• Leases
Examples
• Purchasing a horse boarding facility
• Buying a tractor from a local dealership
• Putting up fencing or a new barn
• Completing kitchen renovations through a home equity line of credit
• Buying ten cattle to expand your beef herd
Set the Meeting
• Can meet at farm or office
• Be prepared to share your story and goals
• Have financials ready
• Do your homework ahead of time
Loan Application
• Federal Tax Returns
• Balance Sheet
• Business Plan
• Supporting Financials
– i.e. bank statements
– Driver’s license
5 C’s of Credit
1. Capacity: How are you going to pay me back?
2. Collateral: What are you willing to give me to secure the debt?
3. Capital: What do you bring to the table? Could you pay one year of payments right now?
4. Character: Credit score, management, production history
5. Conditions: Will vary widely and can include insurance coverage, inspections, periodical financial updates, controls/verifications, etc.
5 C’s of Credit
1. Capacity: How are you going to pay me back?
Repayment
Debt coverage ratio OR
Debt to income ratio
Basically, are you able to pay any expected expenses or debts?
5 C’s of Credit
2. Collateral: What are you willing to give me to secure the debt?
• Loan to Appraised Value (LTV)
• Real estate, equipment, crops
How is collateral secured?
Financing Statements: Equipment, cattle
Mortgages: Real Estate
5 C’s of Credit
3. Capital: What do you bring to the table?
What cash do you have on hand to cover expenses and debts for the next 12 months?
• Working Capital = Current assets – Current liabilities
• Liquidity: Current assets / Current liabilities
5 C’s of Credit
4. Character: Credit score, management, production history
• Past performance is the best indicator of future performance
• A steady track record speaks volumes
5 C’s of Credit
5. Conditions: Will vary widely and can include
• Insurance coverage
• Inspections
• Periodical financial updates,
• Financial controls/verifications, etc.
Balance Sheet
• “Snapshot” of a customer’s financial position
• Outlines Net Worth
• Assets = Liabilities + Equity
Business Plan
• Production and Financial Goals
• SWOT Analysis
• Financial Projections
• Cash Flow Statement
Business Plan
What’s the secret to a good business plan?
MARBIDCO
• Maryland Agriculture & Resource-Based Industry Development Corporation
• www.marbidco.org
– Loan programs
– Grant programs
– Land Preservation programs
MARBIDCO Examples
• Loan Examples
– Vineyard planting loan
– Capital improvements
– Property purchase
• Grant Examples
– Urban Ag Grant
– Value Added Producer Matching Grant
MARBIDCO Example
Scenario: Purchasing farm for $500,000. Lender requires 20% down-payment
$50,000 Cash down-payment
$150,000 MARBIDCO loan
$300,000 Farm Credit loan
$500,000 Purchase Price
Partnering Opportunities
• MARBIDCO
• FSA
• Ag Preservation
• NRCS Cost-share Projects
Questions?Give us a call or shoot us an email.
Kelsey Maslen: [email protected]
Cara Harrison: [email protected]