Financial Options for Expansion
Third-generation rancher expands herd and improves pastureland with short-term credit facility.
Recognized as symbols of strength and determination, female farmers and cattle ranchers are one of the cornerstones of today’s agriculture industry. Their presence in all aspects of the operation has paved the way for greater discussions around their influence and contributions to farming. These remarkable strengths were evident in an eastern Montana cattle rancher who came to AgAmerica looking for a loan program that would help her rebuild her breeding stock and make irrigation upgrades to her pastureland.
The challenge
During the last five years, this cattle rancher experienced back-to-back blizzards and droughts, which adversely affected her stocking rate. To ensure her land could provide enough forage for grazing, the rancher was forced to reduce her herd from 144 to 89.
Facing a depressed cattle market, the monetary value of her livestock declined, driving her risk as a borrower up and lowering her capacity to service loan debt. Despite these obstacles, the Montana rancher developed a clear business plan for the cattle operation. With the right financial lender, she planned on refinancing her current mortgage debts to lower interest payments, as well as taking a cash-out to fund the purchase of additional premium breeding stock. Producing cattle lines with specific genetic traits and dispositions would allow her to obtain premium returns on her herd in the future.
After working with the cattle rancher to understand her history as a borrower and operator, loan experts created a custom $1.2-million three-year credit facility with a $306,000 cash-out to help with the cost of restocking her herd and making upgrades to her 4,100-acre ranch.
The solution
After working with the cattle rancher to understand her history as a borrower and operator, loan experts created a custom $1.2-million three-year credit facility with a $306,000 cash-out to help with the cost of restocking her herd and making upgrades to her 4,100-acre ranch.
A credit facility opens a line of financing between the borrower and the lender, with the lender agreeing to make a certain amount of cash available for use as the borrower needs it. Interest accumulates only on the amount being used.
Acting as both labor and management of her operation, the additional operating capital granted her more freedom as the sole operator and has allowed her to focus on the portion of her operation that she is most passionate about, her cattle.
Editor’s note: This article is from AgAmerica Lending LLC. Photo by Shauna Hermel.
