What Is A Bridge Loan In Agricultural Financing?
Picture the following: You require a large sum to purchase an auctioned land to expand your farm operations, but you don’t have the money now. Even if you were to get an agricultural loan, you’d probably miss the chance anyway by having to wait to get approved.
For this and similar cases, a bridge loan can be an alternative. If you ever need to get agricultural financing fast, know what is convenient. In this blog, we’ll explain it in-depth.
What Is A Bridge Loan?
A bridge loan allows you to get short-term financing quickly to secure an opportunity. In the agricultural scenario, you can use it for many different purposes. Some of the most common ones are:
- Buy, improve or expand the residential or commercial real estate.
- Purchasing equipment
- Debt refinancing
How Does A Bridge Loan Work?
It is essential to know what it is. Still, you may also wonder, How does a bridge loan work? We also explain it here so you can see if it’s suitable for your needs.
Agricultural bridge loans are typically based on real estate, but other options include inventory or other assets. Once you use your loan, you are given a certain amount of time to repay. In agricultural loans, it is typically 1 to 3 years. During this period, you make interest-only payments until you repay your entire loan.
It is important to note that criteria can vary from lender to lender, like any other loan product. For instance, at Janus AG Finance, we have the requirements we just showed you and had several different acceptable situations in which we can provide one for you.
Agricultural Bridge Loans: Is Bridging Loan A Good Idea?
Just like we discussed, the concept of a bridge loan can offer multiple benefits:
- Financing Right Away: Going back to that auction example, you probably can’t afford to wait to get approved for a long-term mortgage. On the other hand, an AG bridge loan only takes a few days, if not two, to get it approved.
- Financing For Different Purposes: There are a plethora of options on how to use your bridge financing. We mentioned the most common ones, but they may go from development to damaged credit, as we offer here at Janus AG Finance. Make sure you consult what your lender accepts.
- Tailored Financing: Even though loan products have specific criteria to be met, AG bridge loans can still offer flexibility on many occasions.
There are a lot of benefits which make it suitable. However, it is understandable that many concerns may arise on how you will repay your mortgage. As a borrower, it is also essential to consider what are the cons of a bridge loan. For instance, interest rates can be higher, and you will need strong finances to apply.
Because of this, a bridging loan is a good idea if you have a clear exit plan. Perhaps you are also curious about who qualifies for one to know that you will have to check your lender’s criteria, but essentially you require good credit and finances. There are multiple options for lenders available, so it is best to choose the one that meets your needs.
Final Tip: Get The Right Assistance
If you are still hesitant and have any more doubts about agricultural bridge loans, at Janus AG Finance, we can assist you. Our experience as lenders and farm operators will help us understand your situation and provide the ideal solution.