A crop loan is beneficial for farmers
Seasonal Loans: Pay a maximum of 4 to 5%!
Do you finance larger purchases of working capital through the current account? Then you are probably giving away cash! This is confirmed by a current top agrar survey.
The spring order is just around the corner. Buying seeds, fertilizers and pesticides quickly costs around 10,000 euros. Many farmers simply use the current account for financing. This could get expensive. Because current account loans currently still cost between 7 and 9% interest, even for farmers with a good credit rating, and occasionally up to 12%.
That can be done much cheaper! Negotiate now with your bank about special conditions for pre-financing the harvest.
The simplest solution: negotiate cheaper interest rates for the current account. Ask if your bank is willing to give you lower interest rates within the approved credit limit for the next few months. Or you can arrange a second line of credit specifically for purchases of operating equipment for which a reduced interest rate, e.g. B. applies for 6 months.
This is inside:Most banks, however, offer special seasonal loans that you can use to pre-finance the next harvest. With some institutes these operate as working capital loans, with others as term or special loans. According to a recent telephone survey by top agrar, interest rates are currently around 4 to 5.5%. With a very good credit rating and high loan amounts, they can be even lower.
With a loan of € 70,000 with a term of 6 months, you can quickly save around € 1,500 in interest if you agree to 4.5% interest on a seasonal loan instead of e.g. 9% on the current account! Not a bad hourly wage for a single conversation with your bank!
The conditions for the seasonal loans differ depending on the bank:
- The terms range from one month to one year.
- Some banks limit their seasonal loans to a maximum of € 50,000. Others grant the favorable conditions only from a certain minimum amount of z. B. € 100,000.
- Most loans have a fixed term with bullet repayment. Some banks also offer loans that can be repaid variably, but tend to charge slightly higher interest rates.
The disadvantage of fixed loans: The interest must be paid over the entire loan amount and for the full term. Early repayment is not possible, even if the money for this would be available from harvest proceeds or cattle sales. Thus, unnecessary costs arise if you choose a loan amount that is too high or a term that is too long. Therefore, if in doubt, it is better to agree shorter terms of 5 to 6 months. If necessary, you can still apply for an "extension".
If you need less credit than the minimum amount given by the bank, you shouldn't give up straight away. Offer the bank to pay a small premium on top of the top interest rates. In case of doubt, the seasonal loan will still be cheaper than financing through the current account.
Second best solution:If the house bank does not offer you a low-interest solution, it can be worthwhile to ask the agricultural dealer or the goods cooperative about the current conditions of supplier credit. Our survey has shown that the interest rates for good customers are currently in a range of around 4 to 7%. For companies that only generate sporadically low sales, the interest rates can quickly rise to 7 to 12%. Then you can just as easily finance via the current account at the bank.
A supplier loan is always only the second best solution. Because in this way you usually bind yourself to the trading partner when purchasing the operating resources and when using the harvest later. That makes it more difficult to negotiate the best terms on the market.
Conclusion: The banks are still being supplied with plenty of money at low interest rates from the central bank. Therefore, you have a good chance of negotiating low-interest seasonal loans for the upcoming purchases of working capital. Take advantage of this! Johanna Budde
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