Ep. 117 Tools from Your Lender
In this episode of AgCredit Said It, host Phil Young is joined by Brent Orians, senior account officer at AgCredit, to discuss two key financial products for farmers: grain inventory loans and the Ag Link Loan program, as well as upcoming educational events hosted by AgCredit.
- Transcription
Speaker 1 (00:08):Welcome to AgCredit Said It, your go-to podcast for insights on farm finance and maximizing your return on investment. Join us as we talk to industry leaders, financial experts, and area farmers, bringing you skillful advice and strategies to grow your farm's financial future. AgCredit Said It, where farm finance goes beyond the balance sheet.
Phil Young (00:39):Welcome back to another episode of AgCredit Said It. I'm Phil Young and I'll be your host. Today we're talking with Brent Orians, senior account officer at AgCredit, and we're talking about grain inventory loans, link loans, and some upcoming events at AgCredit. Welcome, Brent.
Brent Orians (00:52):Hey, Phil. Glad to be here.
Phil Young (00:54):Yeah, welcome. Yeah, let's dive right in. We're obviously talking grain inventory loans, so this is a great product that AgCredit has. What is it? I guess it maybe has a confusing name and it's a tool we use a lot here, so just curious, can you define it for us?
Brent Orians (01:11):Yeah, certainly. Certainly. So I mean, yeah, in our day-to-day, we do a lot of grain inventory loans, especially this time of year. Guys are getting grain out of the field and making use of these great loan products that we got. So yeah, what is a grain inventory loan? A grain inventory loan is essentially it's a short-term operating loan that uses the equity in their harvested stored grain to bridge the gap between selling the grain and payments and bills that they have in the meantime. These kinds of loans, I mean, they're a great way to access capital without actually selling your grain. It's a great tax plating strategy that our guys can take advantage of at year end, and it allows them to have a lot of flexibility and gives them a tool in the toolbox at year end that they can utilize. I mean, it doesn't even have to be at year end.
(02:05):It can be early spring too. If you're worried your operating line's getting close to being maxed out or you're running low on cash and you're just not sure where markets are going to be at, you can utilize these grain inventory loans early in the spring to get cash infusion to help with working capital on your farming operation. Once again, who would this type of loan be good for? A guy who wants to prepay seed, fertilizer, chemicals, those kinds of things, maybe before year end, they've talked with their accountant, but they don't want to sell any more grain. This allows them to pull out that equity that they got in their grain and invest in the 2027 crop that they have coming up. So I mean, one huge plus about doing grain inventory loan with AgCredit is our lending rates, like our rates per bushel are a decent amount higher than FSA.
(03:03):FSA offers a marketing assistance loan, a grain inventory loan, but we can lend a decent amount significantly amount higher than what FSA can on a per bushel basis. So yeah, that allows you to access higher capital levels out of that grain that you have stored. Also, there's a lot less red tape working with us on something like that. There's a lot of different options we can use to get a hold of or use that grain inventory loan.
Phil Young (03:31):Yeah. And you mentioned taxes is one thing. If, "Hey, I just don't want to take this income in 2026, but I need capital." If someone's just trying to play the market, they see all of a sudden the market's going to shoot up January, February, can they also just, if they just want to kind of hold their grain and not sell it yet, that's an option too, right?
Brent Orians (03:50):Yep. Bridges that gap. You got payments to make, you don't want to sell your grain right now. You can access that cash out of your grain by using these grain inventory loans. Granted, they are short term. They're only about a max of nine months, but they're a great, like I said, tool in the toolbox for guys that gives them that flexibility of that grain that they don't have to sell it right now.
Phil Young (04:14):So what's the difference between their normal operating loan and this grain inventory loan?
Brent Orians (04:19):Yeah, you certainly can have both at the same time. The biggest difference between this and a revolving line of credit is a revolving line of credit's kind of like a credit card so
(04:27):Let's say you have a line of credit of $25,000, you pull out $10,000, you pay that $10,000 back, now you have that whole $25,000 of availability to use once again. With a grain inventory loan, let's say you get a $25,000 grain inventory loan, once you pay that back, then you don't have that availability. But these grain inventory loans, yeah, they're a great short term, one time use to extend, maybe get a little bit more additional capital that you didn't have or that you're getting towards the top end of your line of credit you
(05:02):Might've had with us.
Phil Young (05:04):Gotcha. Yeah. So you have your operating loan and this grain inventory loan is extra cash and then it kind of gives you a little bit more of a wiggle room and then like you said, it goes away once you sell the crop.
Brent Orians (05:13):Correct. Correct.
Phil Young (05:14):Okay. Sounds like a good tool. Yeah. So one of the other tools we have here and we have access to is something called the Ag Link Loan, which that term's been thrown around to a lot of our borrowers and it's very popular in Ohio. Can you kind of walk us through what in the world that is and how farmers can use it?
Brent Orians (05:32):We here at AgCredit, we love these Link loans. I personally love them. I sign up my guys as much as I can on these Link loans, but what they are basically, it's just a program that the state of Ohio put out there that allows lenders like AgCredit to reduce their interest rate on their operating loans. And so how they work is once you have a line of credit set up with somebody like AgCredit, we help you apply through the state of Ohio for, if you have a $25,000 line of credit, we help you apply through the state of Ohio for a $25,000 link loan. The state of Ohio will then invest in one of their investments, some of their investments in the interest, the proceeds that they gain from that investment is used to offset your interest rate on your operating loan.
(06:28):So I mean, it's a huge benefit for our guys. I mean, as far as savings are concerned, they could be anywhere from one to one and a half percent or so. I mean, they're just a really good opportunity for our guys in their revolving lines of credit. We can go up to 500,000 on those too, and we certainly do in some cases, but that kind of interest rate savings on a higher dollar, any size operating loan, much less a higher dollar operating loan is significant and just helps in any way with the challenges our guys are facing right now.
Phil Young (07:08):Yeah. And I think we're actively kind of working on the next round of applications right now, if I remember right. And I think I saw it's like a 1.7% savings this round, but the question I get a lot from guys is, do they still get patronage back on that loan? Is that a thing? Do we still get patronage back on those?
Brent Orians (07:25):Oh yeah. I mean, I get that question all the time too. You still get patronage back on them. And so I mean, just the savings compound for our guys on that, I mean, just getting that patronage back plus the Link loan savings. I mean, I would say that's some of the cheaper interest that you can get just about anywhere.
Phil Young (07:44):Yeah. Yeah. And I know that there's limited users in the state. How do we rank as far as the number of users as far as lenders go?
Brent Orians (07:54):AgCredit, we're the number one user of the Link loan program in the state, and I don't think it's too close as far as the second lender. We love these Link loans. They're easy for us to do. They're easy for our customers. It's a signature on a couple pieces of paper from them and they seem to enjoy it. We enjoy it as well. And yeah, it's good all around. It's good for AgCredit. It's good for our customers. If you haven't had a conversation with your account officer about a Link loan, I certainly would give them a call today, tomorrow, whatever it is, and see what they can do to get you involved in the Link loan program because like I said, it's easy, it's free, and it's a program the state of Ohio puts out there that AgCredit is the number one user and certainly enjoys taking advantage of that.
Phil Young (08:45):Yeah. It's just one of those things. Sounds like an environment where everything's getting more expensive, whether it's diesel or fertilizer and chemicals, it's nice to have a program that actually, hey, they can save you some money. So that's awesome that AgCredit does that. Last thing I wanted to ask you about was we like to provide value to the customers. And so it's like, is there any special events AgCredit's doing in the future here? I know that we've done some historical events. What's coming up for AgCredit as far as special events?
Brent Orians (09:11):Yeah. So in the past, I mean, AgCredit used to do the Emerge Conference last couple years. We did the Emerge Conference. I think it was up in Toledo one year. It was down in Columbus, another. This coming winter and early spring of 26, 27, we're doing what we're calling Emerge on the Road. And what it is, is it's basically a series of regional events and we're bringing valuable educational opportunities and networking experiences home to our members. Instead of having to travel to Columbus, Toledo, wherever it might be, you shouldn't have to travel too far, half an hour, 45 minutes at the most, and be able to hear from local experts in their fields that pertain directly to your farm and your farming operation. The first event that we're having is next week. It's November 12th. It's going to be an Upper Sandusky at the Masters Building, and we're going to hear from representatives from Mizick Miller.
(10:05):They're an accounting firm in Bucyrus and Upper. They're going to be talking about year-end tax planning. And if you'd like to join us for that meeting, make sure to visit us at agcredit.net/emerge to register. Yeah, please make sure to register. That way we just have an idea of how many people are going to be at those meetings. Maybe we can plan for snacks and dinner a little easier that way. We have a total of eight events. Then we're going to be covering topics from tax planning, grain marketing, livestock outlooks, road transportation rules for agriculture and a whole bunch more. So once again, these will run from basically November through February. Please make sure to register. You can do that at agcredit.net/emerge. And on there also has the full schedule for everybody.
Phil Young (10:53):Nice. Is there typically food involved at these events, Brent?
Brent Orians (10:57):I mean, yeah, it's AgCredit's way. We try to keep our guys fed and educated as much as we can. So yeah, there's going to be food at the majority of these events, I believe.
Phil Young (11:08):Excellent. Awesome. Good. So you can get your head knowledge full and your belly full at the same time. Nice. And I guess are these open to any AgCredit member? Can anyone come if they're an AgCredit member?
Brent Orians (11:21):Yeah. In the past, the Emerge Conference was marketed more towards the young beginning small guys. Now the Emerge Conference or
(11:28):The Emerge on the Road, I should say, that's going to be open to any member. So feel free, whether you've been farming for 40 years or for four, feel free to register, come to any of the events you want to. And you're more than welcome. I mean, if there's an event in Van Wurt that really sounds interesting to you, you're more than welcome to, and you're from Norwalk, you're more than welcome to register for that event and make the drive over there. We're just going to have different ones at different locations within AgCredit's territory.
Phil Young (11:56):Nice. Yeah. I guess anything else, Brent, from your perspective we didn't cover or highlight from any of those things?
Brent Orians (12:04):I don't think so. I mean, just the fact of the flexibility of the grain inventory loans. I mean, it's a huge... I think I've said it two or three times in this podcast. It's a great tool in the toolbox for our guys. I mean, it just gives you that flexibility of playing the markets, tax strategy, any of those, a whole litany of purposes of why you would use them. Yeah, they're available to our guys and there's plenty that take advantage of that. But no, I mean, other than that, I don't got too much else.
Phil Young (12:29):Excellent. All right. Well, hey, Brent, thanks for joining us today and thanks again for our listeners for tuning in to another episode of AgCredit Said It. Be sure to subscribe in the show in your favorite podcast app so you never miss an episode. So we'll talk to you next time. Thanks guys.
Brent Orians (12:43):All right. Thanks a lot, Phil. Thanks guys.
Speaker 1 (12:53):Thank you for listening to AgCredit Said It. Be sure to subscribe in your favorite podcast app or join us through our website at agcredit.net so you never miss an episode.