Minding Ag's Business
Banks, Farm Credit Working With Borrowers Affected by COVID-19
These are extraordinary times. They're also incredibly uncertain times. Markets -- stock, bond and commodity -- have all been in a free fall, making cash king.
That mentality takes a toll, one well described by DTN Livestock Analyst ShayLe Stewart in her most recent Call the Market column. In it, she described a conversation with a cattle buyer. He told her, "ShayLe, the worst thing cattlemen do in times like this is that they start to look at their assets like liabilities." (You can read the whole column here: https://www.dtnpf.com/…)
This is another variation of the cash-is-king mantra, but as she pointed out: "One positive thing about a bottom in the marketplace is that it's bound to rebound and extremes usually follow one another."
So, while times are tough and it's uncertain how long it will last, there are other options for producers trying to bridge gaps in their business. The first step is talking with your lender.
On Tuesday, the Farm Credit Administration urged its lenders to work with borrowers affected by the coronavirus pandemic, whether through disruption to employees, markets, transportation and other factors.
"FCA regulations and the solid financial position of system institutions give the institutions considerable flexibility to provide relief to borrowers affected by COVID-19," FCA Board Chairman and CEO Glen R. Smith said in a press release. "We encourage institutions to use this flexibility to work with borrowers to lessen any stress and financial burden related to the disease and efforts to contain it."
Farm Credit System institutions can do that by extending loan repayment terms, restructuring debt obligations and easing documentation requirements.
Commercial lenders, in many cases, are willing to do the same.
"Bank actions to assist customers vary by institution and depend on a customer's individual circumstances. They include but are not limited to fee waivers; deferred payments for credit cards, auto loans and mortgages; loan modifications; low-rate and zero-rate loans and other accommodations," the American Bankers Association stated on a website that also lists responses of individual banks and what they're doing to assist customers. You can find it here: https://www.aba.com/…
"The industry can take these steps at this difficult moment in part because America's banks entered this pandemic from a position of strength thanks to record capital and liquidity levels as well as prudent planning and risk management."
While asking for assistance can be difficult, it can also be an important step to help your business weather the storm. And even if you don't need to negotiate terms of assistance with your lender, you may want to call them and ask about refinancing opportunities. For more on that, please read: https://www.dtnpf.com/…
Katie Dehlinger can be reached at firstname.lastname@example.org
Follow her on Twitter @KatieD_DTN
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