The financial side of your farm is just as important as any other aspect. This week, we hear directly from a poultry banker on all things finance.
Question 1
What if someone wants to get into poultry? How much does it cost to get it going?
The banks traditionally want 20%. This can be done in a few ways. Cash combined with land equity is a common approach, especially for generational farmers.
Question 2
How long should you finance your farm?
First, consider your long-term goals. The shorter your term, the lower your interest rate. Traditionally, a newer farm is going to be 15–20 years. Banks use that because integrators want you to do upgrades. A longer term means you build more equity, so you are better off when it’s time to spend on upgrades.
Question 3
What advice would you give to a grower who is debating between doing a shorter five-year term versus committing for the long haul?
Having a relationship with your bank is one of the best approaches when it comes to assessing risk. Poultry bankers have worked with countless others who have faced unpredictable financial hurdles, and they can be your partner in helping you make the best decisions for you to be successful. That is their goal!
Question 4
What does it look like to refinance a farm?
If you have good equity in your farm, it’s an easy, normal thing bankers do. Bankers can often take the estimated cost of those upgrades and roll the loan into your overall loan. Right now, in 2020, it’s the best time to refinance because rates are at an all-time low, and they should be for the next year and a half or so.
Question 5
What are the tax breaks and benefits you can have for making upgrades?
Elections can greatly affect the tax outcomes for farmers. The 10 year treasury has been fairly flat, so they expect things to remain the same. If you’re in the market for an upgrade, make the most of the time right now!
Question 6
What can farmers do to plan for a financially stable future?
Talk to your banker about your future. Farms are very valuable assets, and bankers can help you avoid heavy taxing when you’re ready to transition out of farming.
Contact Us
Whether you're in the Lavonia, GA area or not, you can contact John at johnhylton@pinnaclebank.com if you'd like to talk farm finances with him.
If you need help with poultry biosecurity or simply would like to learn more about what we do, connect with me, Allen Reynolds, at allen@southlandorganics.com or 800-608-3755. Don’t forget to subscribe because we are constantly adding great, educational content to help you keep your farm healthy!
