Kelsey Maslen & Cara Harrison Loan Officers Frederick and ... · Kelsey Maslen:...

Kelsey Maslen & Cara Harrison

Loan Officers

Frederick and Westminster, MD

Office 301-663-4192

Who is Farm Credit?

Financial Cooperative

Customer-owned and customer-focused agricultural lending

institution

What does Farm Credit Finance?

• Farm purchases

• Operating loans

• Equipment

• Rural home loans

• Crop insurance

• Leases

Examples

• Purchasing a horse boarding facility

• Buying a tractor from a local dealership

• Putting up fencing or a new barn

• Completing kitchen renovations through a home equity line of credit

• Buying ten cattle to expand your beef herd

Set the Meeting

• Can meet at farm or office

• Be prepared to share your story and goals

• Have financials ready

• Do your homework ahead of time

Loan Application

• Federal Tax Returns

• Balance Sheet

• Business Plan

• Supporting Financials

– i.e. bank statements

– Driver’s license

5 C’s of Credit

1. Capacity: How are you going to pay me back?

2. Collateral: What are you willing to give me to secure the debt?

3. Capital: What do you bring to the table? Could you pay one year of payments right now?

4. Character: Credit score, management, production history

5. Conditions: Will vary widely and can include insurance coverage, inspections, periodical financial updates, controls/verifications, etc.

5 C’s of Credit

1. Capacity: How are you going to pay me back?

Repayment

Debt coverage ratio OR

Debt to income ratio

Basically, are you able to pay any expected expenses or debts?

5 C’s of Credit

2. Collateral: What are you willing to give me to secure the debt?

• Loan to Appraised Value (LTV)

• Real estate, equipment, crops

How is collateral secured?

Financing Statements: Equipment, cattle

Mortgages: Real Estate

5 C’s of Credit

3. Capital: What do you bring to the table?

What cash do you have on hand to cover expenses and debts for the next 12 months?

• Working Capital = Current assets – Current liabilities

• Liquidity: Current assets / Current liabilities

5 C’s of Credit

4. Character: Credit score, management, production history

• Past performance is the best indicator of future performance

• A steady track record speaks volumes

5 C’s of Credit

5. Conditions: Will vary widely and can include

• Insurance coverage

• Inspections

• Periodical financial updates,

• Financial controls/verifications, etc.

Balance Sheet

• “Snapshot” of a customer’s financial position

• Outlines Net Worth

• Assets = Liabilities + Equity

Business Plan

• Production and Financial Goals

• SWOT Analysis

• Financial Projections

• Cash Flow Statement

Business Plan

What’s the secret to a good business plan?

MARBIDCO

• Maryland Agriculture & Resource-Based Industry Development Corporation

• www.marbidco.org

– Loan programs

– Grant programs

– Land Preservation programs

MARBIDCO Examples

• Loan Examples

– Vineyard planting loan

– Capital improvements

– Property purchase

• Grant Examples

– Urban Ag Grant

– Value Added Producer Matching Grant

MARBIDCO Example

Scenario: Purchasing farm for $500,000. Lender requires 20% down-payment

$50,000 Cash down-payment

$150,000 MARBIDCO loan

$300,000 Farm Credit loan

$500,000 Purchase Price

Partnering Opportunities

• MARBIDCO

• FSA

• Ag Preservation

• NRCS Cost-share Projects

Questions?Give us a call or shoot us an email.

Kelsey Maslen: kmaslen@mafc.com301-663-4192

Cara Harrison: charrison@mafc.com410-848-1033