Tightening Farm Loan Terms

Tightening Farm Loan Terms

Farm loan terms are tightening. Farm loan terms are tightening.

June 20, 2016

NASHVILLE, Tenn (RFDTV) - With lower farm incomes, farm loan terms are tightening in rural America. The Creighton University Rural Mainstreet Index for this month shows 73.5 percent of rural bankers have increased collateral requirements. Over 50% have boost interest rates and 35.3% have rejected a higher percentage of farm loans.

The index surveys community bank presidents and CEO's in rural portions of a 10-state area each month. Even with these conditions, one national credit organization isn't too concerned over the decrease in net farm income.

"We've had a couple of good weeks in commodity markets," says Farm Credit Council President Todd VanHoose.  "So we have seen farmers be more optimistic about the future. They're looking at some more decent prices coming forward. We have seen a rebound in farm finances. We saw a lot of grain go on the market in the last couple of weeks as these prices rebounded a little bit and that's making a difference out there.  In terms of farm credit, it really hadn't made all that much difference. Our balance sheet very closely reflects the farmers out there. So far, so good, we're hoping we can maintain these reasonably better prices."

Farm credit made nearly 80,000 new loans to beginning farmers and ranchers in 2015.

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