Farm and Ranch Bank Participation Loan Program
BND assists a financial institution with a borrower whose financing needs have outgrown the legal lending or exposures limits of the originating lender.
The loan must serve the legitimate credit needs of the state and is made on a sound and collectible basis.
BND will consider a broad range of loan applications. Desirable loans include, but are not limited to:
- Construction, conversion, expansion, repair and update of farm improvements
- Purchase of real estate
- Purchase of livestock
- Purchase, repair and update equipment
- Operating needs
- Refinancing an existing loan
- For any other reasonable agricultural purpose
Maximum loan amount is negotiable
Interest rate: The interest rate on BND’s participation percentage is set in accordance with either the loan policies for the program or the current market rate for similar loans. Factors such as risk, liquidity of collateral, equity position, repayment and the term of the loan will be taken into consideration.
Fees: Commitment fees, origination fees and service fees may be charged. These fees depend on the loan request and are reviewed on an individual basis.
BND uses its normal credit standards in reviewing the loan. These standards include loan size and type of project.
Adequate collateral will generally be required to protect the interest of BND. The collateral must be of such a nature that repayment of a loan is reasonably assured. Examples of acceptable collateral include:
- Accounts receivable and inventory for short-term loans
- Equipment which has an established market
- A first mortgage on farm real estate
- Livestock and crops
In addition, personal guarantees are required from the principals with respect to corporate and partnership borrowings.
Appraisal requirements are evaluated on a case-by-case basis.
BND’s participated loan amount is negotiable. Borrower must work with a local lender to submit the loan application. Lead lender is responsible for servicing the loan.
BND places primary emphasis on a borrower’s ability to repay a loan rather than upon the collateral pledged as security. A specific source of repayment must be identified and agreed upon by all parties. This source must reasonably assure repayment. The repayment terms assigned will vary depending upon the use of proceeds and the overall nature of the business. The following maturities are general guidelines:
- Equipment and livestock: 5-7 years
- Real estate: 15-25 years