Additionally, farm income continues to decrease year-over-year, making it difficult for farmers to have cash on hand for operational expenses and to repay their agricultural loans. As a result, traditional lenders and banks are tightening their credit qualifications—leaving farmers holding rejected applications instead of much-needed operating capital. Despite these challenges, the resilience of farmers and advances in alternative lending solutions are creating financing opportunities for farm operations of all sizes and commodities.

Forging a Stronger Financial Future with Alternative Land Loans

Alternative land loans can meet your needs by offering creative ways to refinance your operation to open up significant cash flow, recover from a bad year, and provide cash-out options for operating expenses, all while continuing to farm your land for generations to come. With an alternative loan, a farmer’s land, and even the operation’s outstanding invoices, can be used as the primary collateral. Alternative loans are generally arranged with more flexible repayment schedules and allow farmers to access cash quickly.

“Commercial banks often don’t understand farmers' unique income situations, and many of these institutions are actually jumping out of those types of loans,” states AgAmerica’s Relationship Manager, Cam Flowers. “But land is good equity,” he adds, “so alternative lending is something farmers should definitely know about.”

Compared to conventional loans, alternative loans can be especially appealing to family farms who are often land-rich, but cash-poor.

Sixth-Generation Farmers Achieve Financial Success with AgAmerica’s Loan Spectrum

For two sixth-generation farmers who own an 1,100-acre row crop operation in North Carolina, finding financial stability began after meeting Flowers in 2016. This couple and their family had experienced it all: continued commodity price drops, a devastating drought, and widespread hurricane damage. Having a deep love for their land, this family couldn’t fathom giving up their operation, but with limited options they were quickly moving towards consolidation.

After introducing them to alternative land loans, Flowers worked with them to develop a custom financial plan that would eventually transition them from an asset-based alternative loan into a fixed-rate conventional loan, while still supporting their continued dream of passing their farm to the next generation.

“We never went through a year before when people didn’t get paid,” The North Carolina Farmer recalls. “The bank wanted more money than we could come up with. They wouldn’t talk to us about options…how we could fix it. If we had stayed with them, we would have been out of business in a year…they would have forced us to sell our land to make ends meet. AgAmerica looked for something good in our operation…not a reason to say no. The ag lender we were using seemed to be putting obstacles in our way at every turn”.

According to Flowers, the hardworking couple fit the profile of the ideal alternative lending candidate. “They had lots of land and good equity in the land, and that was the ticket”.

AgAmerica’s alternative lending helped the North Carolina farmers pay off their land mortgages, consolidate their farm debt, and increase cash flow to improve their financial situation. After a year, Flowers helped the farmers refinance into a longer-term product with a lower rate. The financial flexibility helped their operation diversify their crops, pay off their equipment, and increase their gross revenue by 112 percent. After three years of working with AgAmerica, these farmers had reached financial stability and were ready to transition into a conventional fixed-rate loan in 2019.

Taking the Time to Understand Your Financial Needs

AgAmerica is unique in that they offer both conventional and nonconventional loan products, enabling them to create customized packages that help farmers and landowners meet their finance needs. With low interest rates, long amortizations, and an outstanding 10-year line of credit, they provide a spectrum of loan products that meet the individual needs of farmers across the nation.

When traditional financing can’t meet the needs of your operation, consider learning more about alternative lending solutions offered by non-banks such as AgAmerica Lending, one of the largest, non-bank agricultural lenders in the United States. To learn more about their loan offerings, contact their financing team at 855.214.0328 or visit AgAmerica.com.