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December 13, 2022

When to Consider Refinancing Ag Farm Loans  

Agricultural financing is often a necessary part of farming and ranching, but the way you use that financing is what really counts.  

Amid economic volatility—cash is king. In a rising inflationary pressure and interest rate environment, it’s natural to want to tighten up on spending and delay operational investments until the storm calms down. Unfortunately, in doing so, farmers can miss out on the silver linings that come with it, such as lower prices for land or equipment.  

Strategic agricultural financing can prepare farmers to act on these opportunities while maintaining a safety net of working capital. But having a trusted lender who understands the ag industry and can help you navigate the best loan structure for your current needs is key.  

Refinancing your ag farm loan might be worth looking into if… 

  • You would like to lower your current payments. 
  • You’re interested in altering the terms of existing ag farm loans. 
  • You’d like to adjust your ag farm loan payment schedule. 
  • You want to change from an adjustable to fixed-rate ag farm loan. 
  • You’re hoping to secure capital to expand your agricultural operation. 
  • You want to make property upgrades but don’t have the capital to do it.  

Refinancing Ag Farm Loans: The Challenge 

Once you’ve established that now is the time to refinance your ag farm loan, another challenge often surfaces. Every sector of agriculture faces the uncertainty of market volatility. Periods of strong demand and short supply will inevitably revert to periods of weak demand and oversupply. Farm income, cash flow, and working capital are constantly at the mercy of the markets.  

This uncertainty in the markets creates a challenge for many lenders who would prefer to place their money in a more lender-friendly environment with less regulations. Banks, in particular, carry the burden of balancing their customers’ needs against regulatory guidelines. These restrictions could limit your options to restructure your farm debt when you need it most, ultimately stifling your ability to grow over time. 

Refinancing Ag Farm Loans: The Solution 

As an SEC-regulated nonbank lender with a singular focus on agricultural land, AgAmerica understands the industry’s seasonal nature and can adapt loan terms and payments to work for each unique operation’s balance sheet. Because AgAmerica specializes in these loan types, we are aware of all the logistics and nuances involved to better anticipate the needs of farmers, ranchers, and rural landowners. We take a pragmatic but also conservative approach. Understanding that agricultural landowners need to be able to borrow money in both the good and lean times, we’ve created solutions like our interest-only loans that provide short-term liquidity relief. We then pair these short-term solutions with a long-term financial game plan to ensure your operation is prepared in the years to come no matter what. 

Some of the farm, rural, and agricultural financing products AgAmerica offers include:  

Be proactive in planning for your agribusiness’s future and learn more about how AgAmerica’s ag farm loans are helping farmers seize opportunities and grow through economic uncertainty.  

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