Farm Credit Basics
This is money borrowed that must be repaid with interest.
(What is credit?)
The cost of borrowing money, expressed as a percentage.
(What is interest?)
This statement shows assets, liabilities, and equity at a point in time.
(What is a balance sheet?)
This U.S. system provides credit specifically to agriculture.
(What is the Farm Credit System?)
This protects farmers from crop loss due to weather.
(What is crop insurance?)
This term describes a borrower’s ability to repay a loan.
(What is creditworthiness?)
Interest calculated only on the original principal.
(What is simple interest?)
This statement shows revenues and expenses over a period.
(What is an income statement?)
This government agency guarantees loans to farmers.
(What is the USDA Farm Service Agency (FSA)?)
Spreading investments to reduce risk is called this.
(What is diversification?)
The three main factors lenders evaluate: character, capacity, and this.
(What is collateral?)
Interest calculated on both principal and accumulated interest.
(What is compound interest?)
Assets minus liabilities equals this.
(What is net worth (equity)?)
These loans are used for operating expenses like seed and fertilizer.
(What are operating loans?)
This type of risk comes from price changes in commodities.
(What is market risk?)
This document outlines terms of a loan agreement.
(What is a promissory note?)
This type of interest rate stays the same over the life of the loan.
(What is a fixed rate?)
Cash inflows and outflows are tracked on this statement.
(What is a cash flow statement?)
This type of lender includes banks and credit unions.
(What are commercial lenders?)
Contracts used to lock in future prices are called this.
(What are futures contracts?)
This type of loan is typically used for long-term land purchases.
(What is a real estate loan?)
This type of loan requires equal payments over time.
(What is an amortized loan?)
This ratio measures ability to pay short-term debts.
(What is the current ratio?)
This is pledged property used to secure a loan.
(What is collateral?)
This strategy involves selling before prices drop.
(What is hedging?)