ST
What are the three types of Short-Term Loans?
1.) Revolving Line of Credit (RLOC)
2.) Budgeted Revolving Line of Credit (BRLOC)
3.) Single or Selective Purpose Operating
--e.g. Feed Line, Cow Line, Fertilizer Line, etc.
What is typically the origination fee charged on an IT Loan?
.25% (25 basis points) of the total commitment amount.
What do Long-Term Loans typically finance?
Purchase of long-term assets of a farm or ranch, such as real estate, buildings, and improvements.
A new young customer, age 28, is looking for financing to fund their 2021 crop. What product would you recommend?
RLOC or BRLOC
What interest rate option is available for ST products?
NW Variable Rate
What interest rate options are available for IT products?
Fixed or variable interest rate options are available for IT products.
--Customer may choose rate programs to match desired interest rate risk.
--Fixed, Fixed to Conversion, Variable, etc.
What are long-term loans generally secured by?
Real Estate or other similar long-life assets.
Babe Ruth has retired from baseball and purchased 500 irrigated acres in the Burley, ID area. He wants a long term product to provide funds for unforeseen emergencies or events. What product would you recommend?
Long Term AELOC.
What is the maximum term allowed for ST Operating Loans?
36 months
Bonus Question: What commitment amount or greater requires an annual requalification?
Name 3 acceptable collateral items for an IT loan.
--Machinery & Equipment
--Pivots & similar type fixtures
--Livestock
--Real Estate
--Sugar Beet Shares
--Crops, Receivables, Inventory, etc. can be acceptable depending on structure.
What are two specialized types of Long-Term Loans?
1.) Country Home Loan (CHL)
2.) Ag Equity Line of Credit (AELOC)
Dwight Schrute is attending an auction to purchase a tractor. He needs immediate funding for the purchase and then wants to term out the payments. What product would you recommend?
Bridge Loan (revolving LOC) followed by an Intermediate Term Loan.
What expenses are eligible to be financed by an operating loan? (Name 3)
1.) Operating Inputs - Labor, feed, fertilizer, repairs, etc.
2.) Family living expenses
3.) Capital Purchases
4.) Debt payments
5.) Inventory - livestock, commodities, etc.
6.) Accounts Receivable
7.) Interim/Bridge Loans
What are the two primary re-payment Plans for IT Products?
1.) Equal Principal Plan
--Also called a Decreasing Payment. Equal principal PLUS accrued interest.
--"P+I" Payment Stream
2.) Level Payment Plan
--Combined principal and interest amount. Payment amounts remain the same.
--"P/I" Payment Stream
What is the Penalty Fee amount charged on a Late Payment for an LT Loan?
4%
--ST & IT loans are not penalized for a late payment, however LT loans are charged 4%.
--Default Interest is calculated at the current interest rate +4% on past due principal & interest.
--Assessed the 10th, 20th and the last day of the month.
John Wayne is looking to purchase a 1,000 acre ranch with 200 head of cattle. He is optimistic about the future and believes that interest rates will be lower within the next 3-5 years. What product would you recommend?
Long Term loan that has Variable with Fixed Option pricing.