My first gut reaction to anything with a USDA stamp on it is..

“there’s gonna be LOTS of hoops to jump through, and it’ll be awhile in the process…….” First things first. It’s not enough for most farm loans, to merely be earning a profit at the moment. Every ag lending program I’ve ever seen, whether through USDA or through commercial lenders, requires that you show your business records for typically the last five years. They want to know that not only are you managing things well now, but you have a long track record of managing the farm profitably through all the regular ups and downs of whatever market you’re selling for. And when I say records, I’m talking about typical business accounting reports like Profit & Loss, Cash Flow, taxes, sales records, cost of doing business, etc. So if you don’t have those records, and/or if you don’t have rock solid performance, that right there may disqualify you.
Having said that, perhaps a more careful and prudent approach would be to find a local or regional ag lender, and go in and talk to them about what you would qualify for IF you decided to refinance. Most lenders are happy to sit down with someone (whether residential, commercial or in this case agricultural) and go over your actual numbers to see what you could do today. Ask them about that particular program too, and see if they have any experience with it or with other USDA lending programs. That would give you some really valuable information not only about whether you qualify, but also what are the hoops going to be. Also find out how long it takes between actually making the application, getting an answer, and then getting the money. Those loans are rarely fast. Think in terms of months. Particularly since the USDA offices are coming off the furloughs, they’re going to be seriously backed up with paperwork that needed to go out three weeks ago. I’d let this sit for at least two weeks and let them start to get caught up, before going in for that appt.
Most importantly: if you don’t qualify now (and don’t be surprised if that’s the situation) ask what you’d need to do now, to qualify down the road. This also applies not only to your situation, but to ANYONE wanting to refinance ANY type of loan. Lenders have had a hard time keeping up with all the new financing changes given how flaky the economy has been the last five years or so, and that’s their day in day out jobs. Very difficult for borrowers to keep up with those changes. So even if you would have qualified a few years ago, the rules are all different now. Given that, it’s very, very common for a borrower, or potential borrower, to want to find out what they qualify for. You’d make the lender’s day if you walked in without your heart set on X, but rather wanted to see where you stood and how you can strengthen your application. Or, if you already do qualify, then you’ll KNOW instead of wondering. We’re preparing to do exactly the same thing so that we can learn what to do now, to be able to qualify for buying the farm where we rent land. We don’t want that moment to come one year, two years or five years from now, and go in with fingers crossed, and find out we don’t qualify. Better to find out now, and kill those obstacles now, then present a really solid application later.

February 27, 2016 | Category: reaction | Tag: