If you’re new to taking out agricultural loans, it might seem like a good idea to borrow from your family and friends instead of going to a professional lender. In fact, according to the Federal Reserve Board Survey, loans between friends and family total $89 billion dollars a year.
Despite the common practice, we strongly advise against mixing financial deals into your personal relationships. Here’s why.
- Your relationships can suffer. Money is a sensitive and difficult topic for a lot of people. To borrow money from your relatives or close colleagues, you have to reveal your financial needs, which can be uncomfortable. On top of that, an informal contract rarely has the kind of guidelines needed to ensure happy parties on both sides. Soon you might begin to avoid your friend or relative just to limit the amount of conversations about the loan. And if you struggle to pay it back, or if the lender suddenly requires you to pay more than you expected, resentment can breed on both sides.
- Professional lenders act as partners and financial advisors. When you take out a loan from an official lender, you don’t just receive borrowed funds. You also consult with experts who guide you through the financial process. You and your lender become partners, and it’s in the lender’s best interest to make sure you proceed in the best way possible. And if you borrow from the right lending firm, you’ll also receive reliable, economic resources and a structured financial agreement.
For these reasons, we strongly advise against borrowing from personal friends and family. If you’re looking for a lender who has your best interests at heart, take a look at AgAmerica Lending’s unique loan products. We offer low interest rates, long amortizations, and an outstanding 10-year Line of Credit.