August 2nd, 2012

A Discussion of Agricultural Financing Options

At Allison Leasing Company, we realize that there are many options in financing a growing farming operation and we hope the following discussion will be helpful to you.

Publisher: Jann Stallcup

Financial Diversification: In the past, most farmers have used the local banks for all their financial needs; however, bank mergers and acquisitions have forever changed bank personalities and operational procedures. Today, many farmers financial needs can well exceed the lending limits of their area banks. For maximum flexibility, we suggest that you consider the local bank for operating funds, land bank or insurance companies for Real Estate loans and Allison Leasing for equipment purchases. Experience has shown the danger of over dependence on a single source of financing.

Equipment Lease Vs Loan: Financing equipment with a local bank lender may reduce your borrowing power for operating money and create more liens on your property. A loan also requires that you show the loan amount as debt on your financial statement, thus having a negative impact on your financial ratios. A lease is a rent to own contract. You are not taking on more debt, you are renting equipment with the right to buy it in the future.

Bonus deprecation can be great for maximum depreciation deduction; however, depreciation lowers your income by that same amount. Be careful that depreciation does not lower your income to the point that lenders are concerned with your ability to repay. Bonus depreciation only applies to new equipment. For used equipment, call us to discuss options that will yield similar results. (Allison Leasing can also make loans on equipment if you need the bonus depreciation)

Bargain With Cash: Most major equipment manufacturers offer some kind of lease or loan. Notice the relationship between their promoted low rates and the increase in the price of their equipment. When you work with Allison Leasing, you are bargaining with cash. Our rates are very competitive with local area banks.

Allison Leasing Company appreciates the trust you have placed in us in the past and we want to work with you in the future. When you consider adding equi8pment or buildings, please call to discuss the various options available to you. There are many more than those discussed above.

At Allison Leasing Company, we realize that no two farming operations are exactly alike. We make it our job to know your business inside & out. Thank you for your past business and we wish you the very best in the future.