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I received a request/question to talk about financing agriculture and specifically retailer financing.
I also do several other social media platforms besides podcasting and this was asked on my YouTube live #AMAAA (ask me anything about agriculture) that I do on Monday nights at 9 p.m. central time. I also do a periscope every morning at 7:30 a.am. I also talked about it there but this topic has legs and needs more time then either of those venues can afford it.
Agriculture financing and it is just not your local bank anymore.
But, retailer financing is not really new either. I remember my Father paying the fuel supplier twice a year, once in the spring, once in the fall. We also used to do business with an International implement dealer and they just had this big ledger book that they did the bills out of. If they sent you a bill. When Dad quit, well actually before he quit George (one of the owners) said he noticed I was paying the bill. I said yes so he just crossed out Dad’s name and wrote mine in. I would just go over there every now and then and write them a check. They would enter it in the book and we would move on. Some times I even had a credit balance. Not often but they just did business that way.
Retailer financing is somewhat a different ballgame today. More paperwork and they probably have at least another entity doing the paperwork, if not a whole other business doing their credit.
And, besides local banks there is Farm Credit, government credit through the Farm Service Agency, some states have credit available through economic development programs. Big regional, national, and international banks. But, I also get these credit card type offers all the time offering credit to “my business” at “great” introductory rates, etc., etc.
So what does this all mean, or better question does this do anything for farmers and ranchers???
One big problem is credit is so available that one can get themselves in trouble very quickly.
And, if you are not careful in these tight agricultural economic times, you could end up with way too much short term debt.
As long as you manage your debt correctly more choices are probably a good thing. As long as you manage and structure your debt correctly.
My experience is it is just easier at the local bank and if there is a problem our relationship is already established.